Tax update for 2017 in Estonia
The government has made certain changes to some of the tax rates for Estonia in 2017. At the same time, some of the rates however remain the same, or are subject to only minor changes. This article summarizes the most significant points of the current models and rates of direct taxation in Estonia, as well as the upcoming reforms for the year 2017.
The income tax rate in Estonia will remain in 20% and 25% from the net amount of the dividends paid out by companies. Instead of the previous amount of 170EUR/mo, the employees are allowed to have 180EUR/mo exempted from tax by deducting this amount from the taxable income. The employee seeking for this deduction has to apply for it with a written application, and the deduction can only be utilized by one employer. The most significant, yet small change occurs in the Social tax in Estonia. The current social tax rate in Estonia is 33%. There will be a cut of 0.5% to this rate which leaves the social tax rate to 32.5%.
In the case where a company distributes dividends income tax rate of 25% in Estonia will apply on the distributed dividends in the year 2017.
Minimum salary in will be 470 EUR, and from that the minimum amount of Estonian social tax will be 139,75 EUR. As in the minimum gross salary, there will be an increase in the minimum hourly wages as well. The current minimum hourly wage receives an increase of 0,24EUR, which totals to 2,78EUR/h.
The unemployment tax rates in Estonia will not change in the year 2017. For the employer, the unemployment tax rate in Estonia will still be 0,8% from the employees gross salary, and as regards the employee, the rate will remain at the current 1,6% from the employees gross salary. Similarly, the today’s model of Estonian income tax free business trip allowances when traveling abroad will retain its current form: when an employee is on a business related trip abroad, he/she can be provided with an income tax free allowance of 50EUR for the first 15 days of the trip. For the days exceeding the 15 day threshold, an amount of 32EUR will apply. Any allowances exceeding these amounts will naturally be subject to all the same taxes as salaries.
The state budget for the year 2017 is as follows: the budget income estimation is at 9,42 billion EUR, which is 592 million more than last year’s. Similarly, with regard to the estimation of budget costs for 2017, the estimation is 650 million EUR higher than previous, with the total of 9,57 billion EUR.
To find out more information about the direct or indirect taxation in Estonia, please contact our lawyers at email@example.com.
T: +371 67 240 090
F: +371 67 240 091