Cost of Living

The statutory rate is 22% flat, but the €700/month (€8,400/year) tax-free allowance lowers the effective rate considerably. Someone earning €3,000/month pays 22% only on €1,700/month, giving an effective rate around 12–13%. The rate approaches 22% only for higher earners.

Yes — on retained and reinvested profits. The company pays nothing as long as profits stay in the business. Tax of 20% (plus a new 2% additional levy from Jan 2026 in certain cases) applies when profits are distributed as dividends. This makes Estonia highly attractive for companies reinvesting for growth.

You must register for VAT in Estonia if your Estonian company's annual turnover exceeds €40,000. If you provide services entirely to clients outside the EU, VAT may not apply. Consult an Estonian accountant or use a service like Xolo, which specialises in Estonian company compliance for e-residents.

With an Estonian ID (from a residence permit or DNV), you can open accounts at SEB, Swedbank, or LHV Bank. LHV is most expat-friendly. e-Residents can open business accounts at LHV or Leabank. Revolut and Wise accounts work immediately and are widely used while waiting for a local account.

Estonia is significantly cheaper than Northern and Western Europe but more expensive than its Balkan or Eastern European neighbours. Tallinn is comparable to Prague or Porto — a comfortable single-person life costs €1,600–€2,100/month. Tartu is 15–20% cheaper, making it excellent value for a fully EU-based life.