Tax changes in Estonia in 2026. Defense tax

The following tax changes will take place in Estonia in 2026.

1. A defense tax will be applied on the income of an individual at the rate of 2% from January 1, 2026
2. A defense tax will be applied on the annual profit of a company at the rate of 2% from January 1, 2026.

Comments on tax changes in 2026:

Defense Tax 2%.

For individuals who are Estonian tax residents, the tax base for paying defense tax will be expanded.  Income from foreign companies in the form of dividends and salaries will be added to the income we have listed in the article Taxes change in Estonia in 2025. | MAXWISE  . Also, the personal income which the defense tax will be applied contributions to the 2nd and 3rd pillar pension funds.

To calculate the tax base of the defense tax from companies will be taken annual net profit. This will take into account the defense tax payments made in advance, calculated on the basis of the net profit of the enterprise of the previous fiscal year.

The defense tax will have to be paid by Estonian enterprises. The tax will also be paid by the registered permanent establishment places of business of foreign companies in Estonia.

Dividends received from foreign subsidiaries and permanent establishments in other countries will be deducted from the profit, which serves as the basis for calculating the defense tax.

Defense tax does not reduce the income that is subject to income tax.

The following payments of a legal entity that are subject to income tax are exempt from the defense tax:

– dividends, which are taxed at the rate of 22/78

– special benefits

– gifts

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