Tax changes in Estonia in 2024 and 2025
The newly established Estonian Parliament has endorsed a series of tax law amendments, set to be implemented in stages, with effective dates spanning 2023, 2024, and 2025. These amendments have undergone significant revisions and discussions within the parliamentary process. The key amendments include:
- Standard Estonia VAT Rate Increase:
- Effective January 1, 2024, the standard VAT rate is slated to rise from the current 20% to 22%. This means that most services in Estonia, previously exempt from the increase, will become 2% more expensive. However, businesses with Estonian or EU VAT registration may still be able to deduct outgoing VAT.
- Income Tax Adjustments:
- Commencing on January 1, 2025, Estonian residents will enjoy an increased income tax-free personal allowance of 700 euros per month. This is a notable change from the existing 654 euros per month. It’s worth noting that this tax-free allowance diminishes as income rises, with those earning 2,100 euros or more having no tax-free personal allowance.
- Abolishment of Lower VAT Rate for Accommodation Services in Estonia:
- Starting from January 1, 2025, the reduced VAT rate for accommodation services will be abolished. Consequently, the VAT on hotel stays in Estonia will rise from 9% to 22%
- Introduction of Car Tax in Estonia:
- A new car tax is set to be introduced, effective July 1, 2024. However, specific details regarding this tax have not yet been published.
- Abolishment of 14% Reduced Income Tax Rate on Dividends in Estonia:
- As indicated in public comments, the reduced 14% income tax rate on “regular” dividends paid to legal person shareholders will be abolished.
VALCORP is a licensed fiscal representative in Estonia servicing international companies with their tax compliance and VAT filing requirements in Estonia.
These proposed tax changes are part of the coalition’s strategy and vision for Estonia’s fiscal policy in the coming years. VALCORP is available to provide assistance with tax questions and registration, ensuring you have the support you need to navigate these changes effectively and with compliance. Contact us today by email: info@valcorp.eu or telephone +37255658650.