How is the CIT calculated?
The CIT rate is 20% (20/80 is applied on the net amount of the dividend).
The following example illustrates calculation of the corporate income tax:
- If the company earns income at the amount of EUR 150,000, there is no CIT.
- The above mentioned is applicable also if the company makes EUR 50,000 business related costs.
- If the shareholder decides to distribute profits (the remaining EUR 100,000) as dividends (e.g. next year), making the payment in February, the CIT has to be
declared and paid latest by the 10th March. CIT is EUR 20,000 (100,000 x 20%). Thus, the shareholder receives a net dividend in the amount of EUR 80,000.
- Estonia does not apply a withholding income tax on dividends. Therefore, the CIT cost is the final Estonian tax cost related to the dividend payment
- We recommend to contact your tax advisors in your home country, to determine whether receiving dividends from an Estonian company will trigger any tax obligations there.
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