Estonia Tax Treaty
Quick Summary. Located in Northeastern Europe, the Republic of Estonia borders the Baltic Sea, Gulf of Finland, Latvia, and Russia.
Estonia gained independence in 1991 with the fall of the Soviet Union. It has since become one of the world’s most digitally advanced countries, becoming the first country to hold elections over the internet and to provide e-residency.
The Constitution of Estonia provides for the country’s fundamental law, providing for a unicameral parliament (Riigkogu). Estonia is a democratic parliamentary republic and is comprised of 15 counties. It is based on a civil law legal system.
Effective 2019, Estonia implemented the European Union (EU) 2016/1164 Anti-Tax Avoidance Directive (ATAD), providing for controlled foreign company (CFC) rules, a general anti-abuse rule (GAAR), and thin capitalization rules.
Effective in 2010, Estonia has implemented hybrid mismatch rules consistent with EU directives.
Estonia is a member of the North Atlantic Treaty Organization (NATO), the European Union (EU), and the Organisation for Economic Co-operation and Development (OECD).
Income Tax Treaty between the United States and Estonia
- Convention Between the United States of America and the Republic of Estonia for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with Respect to Taxes on Income, signed at Washington on January 15, 1998
- Technical Explanation of the Convention between the United States and the Republic of Estonia signed on January 15, 1998
Currency. Euro (Eur)
Common Legal Entities. Private/Public limited company, limited partnership, unlimited partnership, commercial association and branch of a foreign corporation.
Tax Authorities. Tax and Customs Board, Ministry of Finance
Tax Treaties. Estonia has 59 tax treaties in effect.
Corporate Income Tax Rate. 20% of the gross amount of the profit distribution.
Individual Tax Rate. 20%.
Corporate Capital Gains Tax Rate. 20%.
Individual Capital Gains Tax Rate. 20%.
Corporate residence. Resident if established pursuant to Estonian Law. Additionally, European public limited companies and associations with registered seats in Estonia are deemed to be resident.
Individual residence. Individual is resident if place of residence is in Estonia or stays in Estonia for at least 183 days over 12 consecutive months (deemed to be resident as of date of arrival in Estonia).
Dividends. – 0%.
Interest. – 0%. Exception for interest derived by a nonresident investor from Estonian pools of assets.
Royalties. – Residents: 0% Nonresidents: 10%.
Commissions. – 0%/10%.
Transfer Pricing. If transactions conducted between a resident legal person and a person associated with that person differ in value from similar transactions between non-associated persons, income tax is charged on the income the taxpayer would have derived or expense the taxpayer would not have incurred had the transaction been conducted with unrelated persons.
CFC Rules. Apply when certain conditions are fulfilled.
Hybrid Treatment. N/A
Inheritance/estate tax. None.
Tax Treaty Network – International Tax Attorneys
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