Based on our previous article regarding upcoming taxes in Estonia, we hereby publish the part II regarding the new taxes which were in processing but not fully adopted during the publishing of our last article.
As of writing this article, the following changes are also fully adopted:
- New value added tax rate. Starting from 01.07.2025, the new VAT rate is 24% (previously 22%)
- Tax-free limits changes. The maximum tax-free amounts of business trip daily allowance and personal car compensation are changed starting from 01.01.2025 the following:
- The personal car compensation maximum tax-free amount shall be 550 EUR (previously 335 EUR) per month and 0,5 EUR (previously 0,3 EUR) per km.
- The foreign business trip daily allowance maximum tax-free amount shall be 75 EUR (previously 50 EUR) per day for the first 15 days (maximum 15 days in a month) and afterwards 40 EUR (previously 32 EUR) per day.
- Fringe benefit regulation limits change.
Starting from 01.01.2025, the employer’s business-related expenses for the accommodation of an employee working on the basis of an employment contract are not deemed to be a fringe benefit if both of the following conditions are met:- the expenses per accommodated employee are up to 500 EUR (previously 200 EUR) a calendar month in the event of accommodation in Tallinn or Tartu and up to 250 EUR (previously 100 EUR) in other events.
- Income tax on gifts, donations and costs of entertaining guests.
Starting from 01.01.2025, income tax is not charged on goods delivered or a service provided for the purposes of advertising, the value of which without value added tax is up to 21 EUR (previously 10 EUR). - Security tax. Starting 01.01.2026, the 2% security tax shall be paid the following:
The security tax applies to:- a resident natural person;
- a non-resident who receives taxable income in Estonia in accordance with this Act;
- a resident company;
- a non-resident company that has a permanent establishment in Estonia.
Amendment of the funded pension contribution rate as of 01.01.2025
From 01.01.2024, natural persons who have joined the second pillar pension fund, are able to increase their 2% funded pension contribution rate to 4% or 6% if they wish (the chosen new rates in 2024 came into force in 01.01.2025). The application can be submitted by 30.11. every year at the latest and the contribution rate can be changed once a year. The new contribution rate will apply from 01.01. each year based on the application done the previous year.
For more information or advice please contact us at tax-legal@leinonen.ee.
