Opening a company in Estonia in 2026 looks different from what most older guides describe — mainly because several announced tax increases never actually took effect. The 2% corporate profit tax was scrapped, income tax stayed at 22% instead of climbing to 24%, and profit left inside a company is still untaxed at company level. This article goes through every change that matters, in plain language, with a note on who each one affects.
Most of the movement happened between mid-2025 and mid-2026. Each entry below states what changed, when it took effect, and what it means in practice for a new Estonian company.
What Changed at a Glance
- The planned 2% annual profit tax was scrapped. It does not exist.
- The planned rise of the income tax rate to 24% was also cancelled.
- Profit you leave inside the company is still not taxed at company level.
- VAT went up to 24% and has stayed there.
- Small cross-border sellers have a new EU-wide VAT exemption option.
- Beneficial-owner data is no longer open to everyone.
- Common register changes now use ready-made templates and go through faster.
- Buyers can insist on a machine-readable e-invoice.
- Small imported parcels carry a new €3 customs charge.
- The e-Residency fee rises on 1 January 2027.
Who this guide is for
Founders deciding whether to register an Estonian company, and existing owners checking that nothing has moved under them — non-residents, e-residents and small business owners who want the changes explained without tax jargon.
Estonia’s 2% Profit Tax and 24% Income Tax Were Both Cancelled
The biggest news is a tax that never happened. It took two separate decisions to kill it, which is why the two figures get mixed up so often.
First, on 19 June 2025 the Riigikogu abolished the security tax package, and with it the planned 2% annual tax on company profits that was to apply from January 2026. But the same reform replaced it with a permanent rise of both corporate and personal income tax from 22% to 24%. Then, in December 2025, the Riigikogu cancelled that rise as well. Both increases are gone; the rate stayed at 22%.
The system therefore works the way it did before: an Estonian company pays corporate income tax when it distributes profit, at 22/78 of the net amount paid out. Retained profit — money kept in the business and used for genuine business purposes — is not taxed at that stage.
Who this affects: everyone. If you have read articles promising a 2% profit tax or a 24% income tax rate, they are out of date. How the rates work in practice is covered in our guide to Estonian company taxes.
Source: Riigikogu.
Estonia’s Standard VAT Rate Is Now 24%
The standard VAT rate rose from 22% to 24% on 1 July 2025 and remains at that level. Accommodation stays at 13% and certain publications at 9%.
It is an easy detail to miss: plenty of templates, price lists and invoicing tools still carry the old 22% figure.
Who this affects: any company selling to Estonian customers, and anyone who set up invoicing before mid-2025 and has not checked it since.
Source: Estonian Tax and Customs Board.
The EU SME VAT Scheme for Small Cross-Border Sellers
Small businesses established in the EU can now use the cross-border SME VAT scheme. In short: a qualifying company can apply a small-business VAT exemption in other participating EU countries without registering for VAT separately in each one.
Two conditions matter. Total turnover across the EU generally has to stay under €100,000, and sales in each country must stay under that country’s own national threshold.
Using it takes one step in advance: you notify your home tax authority, receive a VAT identifier with an EX suffix, and from then on file a single quarterly report covering sales across all member states rather than a return in every country.
There is a trade-off. A company using the exemption normally cannot reclaim input VAT on the exempt sales, so it is not automatically the better choice — it has to be compared against ordinary VAT registration.
Who this affects: small sellers with customers scattered across several EU countries.
Beneficial-Owner Data Is No Longer Public
Since 10 July 2026, information about beneficial owners — the real people behind a company — is no longer open to the general public. Access now depends on who you are and why you need it.
In practice, users now log in with an e-ID — an Estonian ID card, Smart-ID, Mobile-ID or another EU electronic identity — and access is granted by category: competent authorities, AML-obliged entities, contractual partners, and others who can justify a legitimate interest.
This is a privacy improvement, not a reduction in duties. Your company still has to identify its beneficial owners and keep the register updated whenever ownership or control changes. The change follows EU anti-money-laundering law and Court of Justice case law, which held that unrestricted public access was not justified.
Who this affects: owners who disliked being publicly searchable, and anyone who relied on the register to check counterparties.
Source: e-Business Register.
Routine Register Changes Are Now Faster
During 2026 the e-Business Register rolled out automatic decision templates for everyday corporate matters: electing a board member, recalling one, extending a term of office, or amending the articles of association. Instead of drafting and uploading your own resolution, you fill in the required fields and the system generates a legally sound document.
The register published the first results in June 2026, and they are striking: applications using a template cleared the registry check on the first attempt far more often, and median processing time fell to under a day. Preparing the document itself dropped from roughly 25 minutes to ten.
The functionality remains a beta, and complex transactions continue to need properly drafted or notarised paperwork.
Who this affects: anyone making a straightforward change to the management board or the articles.
Source: e-Business Register.
Customers Can Now Demand a Real E-Invoice
Estonia has not made electronic invoicing compulsory for every private-sector invoice. But since 1 July 2025, a buyer registered in the Business Register as an e-invoice recipient can require the seller to send a structured electronic invoice.
A PDF emailed as an attachment does not count. A structured e-invoice carries machine-readable data that moves straight into the buyer’s accounting system. Unless the parties agree otherwise, the European standard EN 16931 applies by default.
The same reform relaxed things in the other direction. Public bodies had been obliged to receive e-invoices only since 2019; that blanket obligation was replaced by the buyer-chooses principle, so the rule is now the same for public and private buyers alike.
Who this affects: companies selling to Estonian public bodies, larger businesses, or anyone with automated accounting. Check that your invoicing software or accountant can issue and receive compliant e-invoices.
The EU’s €3 Customs Duty on Low-Value Parcels
From 1 July 2026 the EU abolished the duty-free treatment of parcels worth up to €150 sent to EU consumers from outside the bloc. In its place comes a flat €3 duty per item type, counted by tariff heading rather than by parcel or by unit.
The distinction matters. A box of five identical T-shirts carries one €3 charge, because they share a tariff heading. A box holding one T-shirt and one watch carries €6, because those are two different items. The duty sits on top of import VAT, not instead of it, and it is charged to the business — the seller, importer or their representative — rather than collected from the customer at the door.
The measure is temporary. It runs until 1 July 2028, after which normal tariffs apply to these goods. A separate handling fee of around €2 per parcel remains under negotiation.
Who this affects: dropshipping, marketplace selling and anyone importing goods from outside the EU. Contracts should state clearly whether the seller or the customer carries this cost.
Source: Estonian Tax and Customs Board.
The e-Residency Fee Rises Next Year
The e-Residency application fee is scheduled to increase from €150 to €165 on 1 January 2027. From that date it is a flat fee, the same whether you collect the card in Estonia or at an embassy, and the same for renewals and replacements. If you were planning to apply anyway, doing so before the end of the year costs slightly less.
Other setup costs are unchanged; the current picture is set out in our guide to the cost of registering a company in Estonia.
What Has Not Changed: Tax on Retained and Distributed Profits
The core of the system is untouched. Retained profits are untaxed at company level; distributed profits are taxed at the moment of distribution. Incorporation in Estonia still does not automatically mean Estonian taxation — if the business is genuinely run from another country, that country may tax it too, whatever the register in Tallinn says. That question is covered in detail in our guide to running an Estonian company from abroad.
Three duties are likewise unchanged: keep proper accounts, file an annual report within six months of the financial year end, and keep register data current. Enforcement has become firmer, and companies that ignore reminders can end up fined or struck off.
Conclusion: Is Estonia Still Worth It?
On balance the year went in founders’ favour. The threatened tax increases did not materialise, the tax model founders come here for is intact, and the administrative side became slightly easier. The costs that did rise — VAT, small-parcel duty — hit specific business models rather than everyone.
Setting up in Estonia still suits digital businesses that need an EU company and intend to reinvest profit. A purely formal structure run entirely from elsewhere remains a poor fit. Whether Estonia works for you comes down to where your business actually operates, and our company formation in Estonia service begins with that question.
Frequently Asked Questions
No. The security tax behind it was repealed before it took effect, so there is no annual 2% charge on company profits.
It is 22%. The planned increase to 24% was cancelled. The 24% figure people remember is the standard VAT rate, which is a different tax.
Yes. Corporate income tax arises when profit is distributed, not when it is earned. Retained profit used for genuine business purposes is not taxed at that stage.
Shareholders and board members remain visible in the Commercial Register. Beneficial-owner data has been restricted since 10 July 2026 and now requires a legal basis or legitimate interest to access.
Only on request. A buyer registered in the Business Register as an e-invoice recipient can require a structured electronic invoice; a PDF by email does not satisfy that request.
Per item type, by tariff heading — not per parcel and not per unit. Five identical shirts in one box attract €3; a shirt and a watch attract €6. It applies on top of import VAT and runs until 1 July 2028.
The fee rises from €150 to €165 on 1 January 2027, so applying earlier is marginally cheaper. It is a small difference and not a reason to rush the decision itself.
