Accounting and Tax in Estonia for Foreign-Owned Companies: 2026 Guide

Author: Maris Lampe
Tax content reviewer: Maris Lampe

Updated draft: 8 October 2026. This guide focuses on Estonian private limited companies (OÜs) with foreign owners. It provides general information; the correct treatment depends on your transactions, tax residence and operating arrangements.

A foreign-owned Estonian company needs reliable accounting records, the correct VAT treatment, a clear approach to salaries and board remuneration, and an annual reporting process. Foreign ownership does not remove Estonian compliance obligations. Running the company from another country can also create obligations there.

What accounting and tax services does your company need?

Depending on your activities, you may need bookkeeping, bank and payment-account reconciliation, VAT registration assessment and returns, payroll, reporting of dividends and other taxable payments, annual reporting, cross-border tax advice and management reporting. The workload depends on transactions, employees, VAT status, countries involved, payment platforms, currencies and supporting documents.

1. Establish a practical accounting process

Agree how sales and purchase invoices, bank statements, payment-platform reports, contracts and expense records will reach your accountant. A bank transaction alone may not explain what was purchased or why it relates to the business.

1. Collect invoices and supporting records from every business account and platform.
2. Identify missing documents and explain unusual transactions.
3. Separate company costs from personal expenditure.
4. Review financial reports and upcoming tax payments.
5. Resolve questions before filing deadlines.

Ask for reports that help you understand profitability and cash flow, as well as confirmation that declarations have been filed.

2. Understand VAT registration and the 24% standard rate

Estonia's standard VAT rate in 2026 is 24%. Reduced rates, zero-rating and exemptions apply to specific transactions. A foreign customer does not automatically make an invoice VAT-free.

The ordinary Estonian registration obligation arises when the supplies specified by the VAT Act, with their place of supply in Estonia, exceed €40,000 from the beginning of the calendar year. Check which supplies count rather than simply comparing the threshold with worldwide turnover.

VAT obligations can arise before €40,000

A business that is not already a regular VAT payer may need to register as a taxable person with limited liability when receiving certain services from a foreign business not registered for VAT in Estonia. These include advertising, consultancy and electronically supplied services. The obligation can arise from receipt of the service; there is no general €40,000 sales threshold protecting those purchases.

Qualifying intra-Community purchases of goods have a separate €10,000 calendar-year threshold, subject to applicable rules and exceptions.

• Identify whether the transaction concerns goods or services.
• Confirm the customer or supplier's country and VAT status.
• Establish the place of supply.
• Check reverse charge and other special rules.
• Confirm the reporting obligations.

Example: A domestic supply of €1,000 subject to the standard rate has €240 VAT and an invoice total of €1,240. This does not apply automatically to cross-border or exempt supplies.

Sources: MTA tax rates, VAT registration, limited-liability registration.

3. Distinguish corporate profit, dividends and other payments

The standard corporate income-tax calculation for taxable dividends and profit distributions is 22/78 of the net distribution.

Example: A taxable net dividend of €7,800 produces company income tax of €2,200: €7,800 × 22/78. The total company cash outflow is €10,000, before shareholder-level foreign tax consequences.

This is not 22% of the net dividend. The former 14/86 reduced rate is not the standard rate for a new distribution. Transitional rules can still matter when redistributing certain dividends taxed under the former regime.

If you also work for or manage the company, a dividend is not interchangeable with salary or board remuneration. Identify the role, work performed and basis of each payment. Assess dividend taxation in your country of residence separately; Estonian company tax does not automatically settle foreign obligations.

Source: MTA taxation of dividends.

4. Apply payroll rules to the right payment

The following are the main 2026 rates for ordinary employment subject to Estonian payroll rules:

The general basic exemption no longer decreases as income increases in 2026. Employers apply it on the basis of a written application. Separate rules apply at pensionable age, and a non-resident's entitlement must be assessed.

The monthly base for the minimum social-tax obligation is €886, corresponding to €292.38 of social tax where that obligation applies. This is not the current full-time minimum wage. From 1 April 2026, the full-time minimum monthly wage is €946, and the minimum hourly wage is €5.67.

Foreign employees and non-resident directors

Do not apply an ordinary employee calculation automatically to someone working abroad or receiving board remuneration. Work location, payment type, residence and the applicable social-security system matter. A valid A1 certificate may change Estonian social-security obligations.

Remuneration paid to a non-resident board member of an Estonian company can be taxable in Estonia even when the company is managed from abroad. Obtain a specific assessment before setting up the first payment.

Sources: MTA tax rates, tax liabilities of companies established by e-residents.

5. Maintain a monthly compliance calendar

Plan both declarations and payments. When a tax deadline falls on a public holiday or other day off, MTA guidance treats the next working day as the deadline. Check current submission requirements with your accountant and software provider.

Sources: MTA VAT returns and reports, MTA TSD guidance.

6. Prepare the annual report even if the company is inactive

An Estonian OÜ must generally submit its annual report within six months after its financial year ends. For a calendar-year company, that normally means 30 June of the following year. A report is required even without economic activity.

An ordinary calendar-year report covering 2026 is due by 30 June 2027. Begin with reconciled records, determine the required report format, and assess whether an audit or review is needed.

The e-Business Register supports an informative English report, but the Estonian version is signed and submitted. Arrange management approvals and representation rights in advance.

Source: RIK annual reporting guidance.

7. Review the implications of managing your company abroad

Estonian incorporation does not ensure that your activities are taxable only in Estonia. Management or business activity abroad may create a foreign permanent establishment or other local tax obligations. Document where decisions are made, where people work, where the business operates and which country taxes your personal income. Coordinate Estonian accounting with advice in the other country when necessary.

Source: MTA guidance for companies established by e-residents.

8. How to choose an accounting firm

1. Ask about experience with your countries, activities and transactions.
2. Confirm who reviews cross-border VAT, board remuneration and owner payments.
3. Clarify included services and separately agreed work.
4. Agree which documents are needed and when.
5. Confirm who submits declarations and handles approvals and payments.
6. Discuss management reports.
7. Plan transfer and reconciliation of existing records.
8. Agree how missing information and tax-rule changes are communicated.

Practical checklist for foreign owners

• Confirm where your company operates and where people work.
• Assess ordinary and limited-liability VAT registration.
• Agree document delivery and accounting responsibilities.
• Separate salaries, board remuneration, dividends and reimbursements.
• Check pension and social-security status.
• Plan TSD, VAT and EU reporting deadlines.
• Reserve time for annual-report preparation and approval.
• Review cash flow, profitability and tax payments.

Frequently asked questions

Does a company with no sales need an annual report?

Yes. An OÜ must submit an annual report even without economic activity. The usual deadline is six months after its financial year ends.

Is every company below €40,000 exempt from VAT obligations?

No. The threshold has a defined scope. Receiving certain foreign services or buying goods from another EU country can create separate obligations.

Is dividend tax 22% of the payment to the shareholder?

No. The standard company tax is 22/78 of a taxable net distribution. A €7,800 taxable net dividend produces €2,200 of company tax.

Can salary and board remuneration use the same calculation?

Do not assume so. Assess payment type, residence, work location and social-security rules first.

Does Estonian registration remove foreign tax obligations?

No. Business or management activity abroad may create obligations there, and your residence country may tax your income.

Accounting support for your Estonian company

E-Raamatupidamine24 provides accounting, tax advice, payroll, annual reporting and financial-management support. Tell us about your activities, countries, transactions, employees, VAT status and existing accounting arrangements.

Explore English-language accounting for international companies or review our accounting services and pricing.

Request an accounting proposal.

This article is general information based on the 2026 guide. It does not cover every exemption, industry-specific rule or foreign jurisdiction. Obtain advice for your circumstances before implementing a tax treatment.