What Taxes Must a Small Business in Estonia Pay?

A small business operating in Estonia encounters several different tax obligations depending on its field of activity, whether it has employees, and its VAT registration status. The main taxes every entrepreneur must consider are income tax, social tax, unemployment insurance contributions, and VAT. Estonia's income tax system is favourable for businesses: corporate income tax is only payable when profits are distributed as dividends or other payments. Retained earnings are not taxed, giving companies the opportunity to reinvest funds without an immediate tax burden. When employing staff, the obligation arises to calculate and pay social tax (33% of gross salary), unemployment insurance contributions (employer's share 0.8% and employee's share 1.6%), and to withhold income tax from salaries at the applicable rate. All payroll-related taxes are declared monthly through the TSD declaration. VAT liability arises when a company's taxable turnover exceeds €40,000 in a calendar year. A VAT-registered company must submit a monthly VAT return and pay VAT to the state. Professional accounting ensures that all tax obligations are met accurately and on time.