# Estonian Tax Basics – Knowledge Base  Author:: newtab ## Highlights > Generally, residents are taxed on their worldwide income in their state of residence. This means that the country where you submit your annual personal income tax returns usually wants to tax income you have earned from everywhere else in the world. Normally there are also both domestic as well as bilateral measures in place to avoid or mitigate double taxation if this income has already been subject to tax in the country where you received it from, i.e. the source state. ([View Highlight](https://read.readwise.io/read/01fyybscrm3mzhy3cpcvfy96pw)) > In Estonia, income tax is not assessed on the profit earned every year. Income tax is assessed on a monthly basis and **only when profits have been distributed** (when you pay out dividends for example). The **corporate tax rate** is generally a flat 20%, calculated as **20/80** from taxable net payment. Since 2019, if regular dividends are paid out, a reduced rate of 14/86 may apply. ([View Highlight](https://read.readwise.io/read/01fyybswxa2cdz3agca34tabss)) > Besides corporate income tax, e-residents with businesses in Estonia will also need to consider the following Estonian taxes: > • **20% income tax** from the director's fee; > • **33% social tax** from the director's fee. ([View Highlight](https://read.readwise.io/read/01fyybt7em707egtxh0ynksvkw)) > If your annual taxable turnover is below €40,000, VAT registration in Estonia is not obligatory. [Learn more about VAT registration](https://learn.e-resident.gov.ee/hc/en-us/articles/360000871738-VAT-registration). ([View Highlight](https://read.readwise.io/read/01fyybtcem9s54v2xxp1dr6b5m)) --- Title: Estonian Tax Basics – Knowledge Base Author: newtab Tags: readwise, articles date: 2024-01-30 --- # Estonian Tax Basics – Knowledge Base  Author:: newtab ## AI-Generated Summary None ## Highlights > Generally, residents are taxed on their worldwide income in their state of residence. This means that the country where you submit your annual personal income tax returns usually wants to tax income you have earned from everywhere else in the world. Normally there are also both domestic as well as bilateral measures in place to avoid or mitigate double taxation if this income has already been subject to tax in the country where you received it from, i.e. the source state. ([View Highlight](https://read.readwise.io/read/01fyybscrm3mzhy3cpcvfy96pw)) > In Estonia, income tax is not assessed on the profit earned every year. Income tax is assessed on a monthly basis and **only when profits have been distributed** (when you pay out dividends for example). The **corporate tax rate** is generally a flat 20%, calculated as **20/80** from taxable net payment. Since 2019, if regular dividends are paid out, a reduced rate of 14/86 may apply. ([View Highlight](https://read.readwise.io/read/01fyybswxa2cdz3agca34tabss)) > Besides corporate income tax, e-residents with businesses in Estonia will also need to consider the following Estonian taxes: > • **20% income tax** from the director's fee; > • **33% social tax** from the director's fee. ([View Highlight](https://read.readwise.io/read/01fyybt7em707egtxh0ynksvkw)) > If your annual taxable turnover is below €40,000, VAT registration in Estonia is not obligatory. [Learn more about VAT registration](https://learn.e-resident.gov.ee/hc/en-us/articles/360000871738-VAT-registration). ([View Highlight](https://read.readwise.io/read/01fyybtcem9s54v2xxp1dr6b5m))