Taxes 2025

There will be a number of changes to tax laws in the new year.

From 1 January 2025

1. Corporate tax rate 22/78 instead of the current 20/80. The possibility of paying out profits at a lower tax rate (14%) is also abolished.
2. Individual income tax rate of 22%, instead of the current 20%.
3. The VAT rate for bed and breakfast will rise from 9% to 13%.
4. The VAT rate for magazine publications will rise again from 5% to 9%.
5. The minimum social tax liability is linked to the minimum rate of the previous year, in 2024 the minimum wage for a full-time employee was EUR 820. Therefore, from 01.01.2025 the minimum social tax liability will be based on EUR 820, i.e. the minimum social tax liability is EUR 270.60 (currently EUR 239.25). This change is important to note for those who work part-time, e.g. as a member of the board of directors – in order not to interrupt the health insurance, already the December salary, paid in January, has to be calculated on the basis of the new rate.
6. There will also be a motor vehicle tax, which is a national tax paid by all owners or responsible users of motor vehicles registered in the road register. The tax is collected in a similar way to the land tax, with a tax notice being sent by 15 February and payment due by 15 June and 15 December. For more details, see the website of the Tax Administration: https://www.emta.ee/ariklient/maksud-ja-tasumine/muud-maksud-ja-nouded/mootorsoidukimaks#arvutamine

A bit more on the security tax, about which we have received many questions.

The security tax consists of three parts:

• 2% of turnover (VAT increase to 24%) from 01.07.2025 onwards.
• 2% on personal income from 01.01.2026 onwards
• 2% of companies’ annual profit before tax on profits from 01.01.2026 onwards

The company’s profit tax is already linked to its business activities in 2025. The taxable profits will be the accounting profits, from which only a few exceptions related to the avoidance of double taxation are allowed. The first advance payment will be on 10.09.2026, where ½ of the profit for 2025 will be taken into account, if the 2025 annual return is not filed, the tax will be calculated on the basis of the last annual return filed. After the submission of the annual report, a recalculation will be made on the basis of the actual profit. Further guidance on how to declare the payment of the tax will certainly be forthcoming, and it will remain the responsibility of the accountant to formalise this, in a similar way to the filing of the current returns. I enclose an illustrative example of the calculation/recovery of security tax during the period of its application. In the example, the 2025 profit is 100 000, 2026 profit 120 000, 2027 profit 80 000 (for the financial year period 01.01.-31.12., if the financial year period is different from the calendar year, the rule also includes 2024, the payment dates are the same):

Table: Grant Thornton