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Estonian Tax Review for the 2025–2026 Season (Updated)

Starting January 1, 2025, the Personal Income Tax (PIT) rate will be set at 24%.
The tax-free threshold will remain at €654 per month.

As of January 1, 2025, the corporate tax on distributed profits will be calculated at 22/78, which is effectively 28.21%.
The previously available reduced 14% rate for regular dividend distributions will be bolished.

From July 1, 2025, the standard VAT rate will increase from 22% to 24%.
Reduced VAT rates will also change:
- Hotels: from 9% to 13%
- Media/Press: from 5% to 9%

New Car Tax: Includes a registration fee (starting from €50), plus surcharges based on CO₂ emissions and vehicle weight.
The 7% intermediary dividend tax rate for individuals will be removed.
Land Tax Reform: Municipalities may increase local land tax rates up to 2.5%.
Excise Duties on fuel, alcohol, and tobacco will increase.

From January 1, 2026:
- The Personal Income Tax will remain at 24%.
- The Corporate Income Tax on distributed dividends will increase by an additional 2%, reaching approximately 30%.

Starting July 1, 2025, all businesses registered in Estonia’s e-Business Register will have the right to request structured e-invoices from suppliers — even in B2B private-sector transactions.
- If requested (and no other format was agreed upon), invoices must conform to the European EN 16931 standard.
- Other formats may still be used if mutually agreed between parties.
By 2027, Estonia aims to introduce mandatory B2B e-invoicing for all VAT-registered entities.

We recommend reviewing your pricing and promotional strategy, taking into account the upcoming tax rate increases and regulatory changes.

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