Estonia ranks #1 in the OECD for tax competitiveness, for the 12th year running. If you’re an entrepreneur considering where to base your business, here’s what makes Estonia stand out.
Flat and Simple
Estonia charges a flat 22% on all income: employment, capital gains, rental income, pensions. No progressive brackets. No complicated calculations.
A household earning €161,000 (roughly £140,000) takes home about €124,500 after tax. The same income in the UK? About £97,500. That’s over £10,000 more in your pocket.
Taxes you will not pay in Estonia
- No inheritance tax. What’s been taxed once won’t be taxed again.
- No stamp duty. Estonia uses an annual land tax (0.1-2% on land value only, not buildings).
- No dividend tax on Estonian companies. Corporate profits are taxed at 22% when distributed, so shareholders don’t pay twice.
The Trade-offs
Estonia funds its services differently:
- VAT is relatively high at 24% (vs. UK’s 20%)
- Employers pay a 33% social tax on top of salaries
- Property taxes are minimal (0.6% of total revenue vs. UK’s 12%)
The Real Advantage
It’s not just about lower rates, it’s about transparency. You can calculate your tax liability in minutes. No hidden cliff edges. No erosion of personal allowances. No juggling income tax, national insurance, and student loan repayments.
For entrepreneurs building a business, that simplicity matters. You spend less time on compliance and more time on growth.
Worth Considering?
If you’re an expat entrepreneur looking for a business-friendly base with EU access, Estonia’s e-Residency program lets you establish and run an Estonian company remotely. The tax system is one reason why over 100,000 entrepreneurs from 170+ countries have already signed up. Do note that this not automatically makes your company a tax resident of Estonia and you could still be liable for taxes elsewhere. Moving to Estonia would definitely change that.
Read our full guide on doing business in Estonia for more information or get in touch with local advisers via the form below:
