How does Estonian CIT work?
Under classic CIT a company pays tax on its income as it arises, regardless of whether the profit stays in the business. Under Estonian CIT, tax is due only when profit is distributed (dividends) or other benefits are provided to shareholders. As long as the profit works inside the company — financing investments, inventory, employment — there is no tax.
Effective taxation in 2026
On distribution, the combined burden (company CIT + shareholder PIT with the deduction) amounts to:
- approx. 20% for small taxpayers (revenue up to EUR 2 million),
- approx. 25% for other companies.
By comparison, the classic model (9% or 19% CIT plus 19% dividend tax) gives an effective rate of roughly 26% and 34% respectively. The difference becomes significant with higher profits and reinvestment plans.
Entry conditions
- legal form: sp. z o.o., S.A., P.S.A., limited partnership or limited joint-stock partnership,
- shareholders are natural persons only,
- the company holds no shares in other entities,
- employment of at least 3 people (with facilitations for small and new businesses),
- passive revenues do not exceed half of total revenues.
What to watch out for
The biggest practical risk is hidden profits — benefits to shareholders other than dividends (renting private assets to the company above market rates, excessive remuneration, cars used privately), which are also taxed. Entering the regime also requires an initial adjustment and a four-year commitment period.
Who benefits most?
Estonian CIT works best for companies that generate stable profits and largely reinvest them, with moderate shareholder distributions. Companies paying out all profits benefit less, but can still gain from the lower combined rate.
Considering a change of tax regime for your company? Contact us — we will analyse your numbers and show the outcome under both variants.