Starting from 01.01.2025, the minimum wage will increase to 886 euros per month (it was 820 euros in 2024, 725 euros in 2023, and 654 euros in 2022).
In 2025, the tax-free income threshold for resident natural persons will remain the same at 654 euros per calendar month (7,848 euros per year, except for persons of retirement age where it’s 9,312 euros). The “Tax Curve” (“Maksuküür”) will also remain in effect with the same formula: 654 − 654 ÷ 900 × (payment - 1200).
The minimum social tax liability in 2025 is 270.60 euros (33% of the previous year’s minimum wage, i.e., 820 euros × 33%). This is the amount that must be paid monthly for an employee with an employment contract, and for other contracts, this is the minimum amount that must be paid for the employee to have valid health insurance.
From January 1, 2025 the income tax rate will be 22% (20 % until Dec 31, 2024).
From Jan 1, 2025 the income tax rate of a legal person will be 22/78 (20/80 until Dec 31, 2024).
For example, if 1,000 euros is paid out as net dividends to the owner’s bank account until Dec 31, 2024, the total tax cost (at the standard income tax rate) is 250 euros. In case of the payouts from Jan 1, 2025, the income tax is already 282.05 euros (12.82% increase in tax liability).
The lower tax rate of 14/86 for dividends and the 7% withholding income tax on dividends paid to natural persons will be abolished. Therefore, from 2025, dividends will only be taxed at a rate of 22/78.
The vehicle tax consists of two components: registration fee and annual tax.
Both can be calculated using this calculator.
Motor vehicle tax is a state tax paid by all owners or responsible users of motor vehicles registered in the traffic register. The motor vehicle tax is collected by the Tax and Customs Board according to issued tax notices. These notices will be sent out by the ETCB no later than 15.02.2025. The tax payment deadlines are 15.06 and 15.12.
The registration fee is paid before registering cars and vans in the traffic register. The registration fee must also be paid upon the first change of ownership of vehicles already registered in the Estonian traffic register, provided that no registration fee has been previously paid for that vehicle.
Since 2019, submitting e-invoices became mandatory for the public sector, and now there is a gradual move towards the private sector as well. Specifically, from 01.07.2025, all accounting entities who have registered themselves as e-invoice recipients in the commercial register will have the right to request invoices from suppliers in e-invoice format. This means that not all sales invoices need to be automatically sent as e-invoices, but if a customer requests it, this must be complied with.
From January 1, 2025 the following changes will be applied:
From 01.01.2025, persons who have joined Pillar II will have the opportunity to increase their funded pension contribution rate from 2% to 4% or 6%. To make the change, a corresponding application must be submitted to the pension register keeper or account manager during the period 01.01.2024-30.11.2024. The new rate will take effect from 01.01.2025. If an employee has multiple employers, the new rate applies to all employers. The state’s contribution of 4% remains unchanged.
| Alcohol | until 2024 | from 2025 |
|---|---|---|
| Beer (ethanol content per percentage volume per hectoliter) | 13,34 | 14 |
| Fermented beverage and wine up to 6% (incl.) (hectoliter) | 66,52 | 69,84 |
| Fermented beverage with ethanol content over 6% (hectoliter) | 155,21 | 162,97 |
| Wine over 6% (hectoliter) | 155,21 | 162,97 |
| Intermediate product (hectoliter) | 303,8 | 319 |
| Other alcohol (ethanol content per percentage volume per hectoliter) | 19,75 | 20,74 |
Alates 01.07.2025 tõuseb taas käibemaks ning Eestis käibemaksu uus standardmäär hakkab olema 24% (senise 22% asemel). Sellega seoses lõpevad 30.06.2025 ära varasemad käibemaksu ülemineku jätted, mis algselt pidid kehtima 31.12.2025 kuupäevani.
Previously, for virtually delivered events (such as training), the rule was that if the training is conducted by a trainer, VAT was added based on the physical location of the event. And if the event was fully automated (for example, pre-recorded training that can be purchased and listened to at a convenient time), then VAT was based on the location of the service buyer. From the VAT Law change on 01.01.2025, in both cases, the basis will be the location of the service buyer.
Until now, the rule was that when selling a new building that has already been put into use, VAT did not need to be added to the sale. However, from the VAT Law change on 01.01.2025, VAT must also be added if a new or significantly improved building has been put into use. The important condition is that this sale takes place within one year after putting into use (the lease length must be at least 12 months) and it is the first transfer of ownership. After one year has passed, VAT does not need to be added.
Until the law amendment on 01.01.2025, input VAT on fixed assets had to be adjusted at the end of each calendar year (if the fixed asset was not 100% used for taxable supply), according to the new rule this must be done in full upon initial deployment. Later it will be adjusted over 5/10 years according to actual use.
Valid only for fixed assets that are put into use from 01.01.2025.
From 01.01.2025, turnover from financial services and insurance services is also included in the VAT registration threshold. This applies when these services are not of an occasional nature.
On the other hand, transactions that are taxed at 0% rate in Estonia and where the place of turnover is in a foreign country do not need to be taken into account.
This change stems from the EU directive and aims to reduce the administrative burden on small businesses. While currently in many EU member states there is a rule that VAT registration is required from the first euro, as the local registration threshold does not apply to businesses from other countries, this is now being changed.
The special scheme for small enterprises can be applied by companies whose annual turnover in the European Union does not exceed 100,000 euros. This applies to both the current and previous year.
The special scheme does not apply automatically but requires an application indicating in which member states the company wishes to operate. However, this decision is not made by the local tax authority, as they ask for separate permission from each member state to grant the special scheme rights to the company. After receiving permissions and thus implementing the special scheme, such turnover must be declared but not taxed. This allows tax authorities to monitor the fulfillment of thresholds. If the local VAT registration threshold is met in any member state, the right to use the special scheme in that country ceases, and the company should register directly as a VAT liable person in that country.
A company wishing to apply the special VAT scheme for small enterprises does not need to be VAT registered in the local country (Estonia).
It is very important to note that applying this special scheme comes with a limitation on input VAT deduction - there is no right to deduct input VAT on services and goods purchased for turnover arising through this special scheme.
Users of this special scheme cannot use reverse charging and also do not have the obligation to register as limited VAT liable persons. For third parties to know that the company has joined the special VAT scheme for small enterprises, the VAT code logic changes and “EX” is added to the end of this code.
Starting from 01.01.2025, the following tax-exempt expense limits will change:
| Expense type | NEW | Old |
|---|---|---|
| Per diem allowances for the first 15 days of foreign business trip | Up to 75 euros | Up to 50 euros |
| Per diem allowances for subsequent days of foreign business trip | Up to 40 euros | Up to 32 euros |
| Compensation for personal car use | Up to 0.50 euros per kilometer, maximum 550 euros per calendar month | Up to 0.30 euros per kilometer, maximum 335 euros per calendar month |
| Health promotion expenses | 400 euros per employee per year (the total amount remains the same, but there will be more flexibility in using the limit) | 100 euros per employee per quarter |
| Entertainment expenses | Up to 50 euros | Up to 32 euros per calendar month |
| Promotional gifts | Up to 21 euros from the amount excluding VAT | Up to 10 euros from the amount excluding VAT |
| Employee accommodation expenses in Tallinn and Tartu | Up to 500 euros per employee per calendar month | Up to 200 euros per employee per calendar month |
| Employee accommodation expenses elsewhere in Estonia | Up to 250 euros per employee per calendar month | Up to 100 euros per employee per calendar month |
| Meals for ship crew and civil aircraft crew members | Up to 20 euros per day per employee | Up to 10 euros per day per employee |