Estonian e-residents' firms will also have to pay new corporate income tax
Once the Estonian government has imposed a two-percent corporate income tax, likely from 2026, the obligation will also apply to companies set up by e-residents.
The total number of Estonian startups associated with an e-resident make up nearly 40 percent of the total, according to the e-Residency program's website.
Liina Vahtras, head of Estoniaäs e-Residency program, told ERR that as a general rule, all regulations applying to Estonian businesses and businesspeople apply to e-residents' firms too – no exceptions have ever been applied.
Vahtras said: "Because companies created by Estonia's e-residents are regular Estonian businesses, the planned tax changes will affect them too."
The Ministry of Finance was unable to comment on the issue when asked Thursday, though a spokesperson shed more light on the requirement that corporate income tax will be due in advance, from 2026.
Evelyn Liivamägi, ministry permanent undersecretary with the responsibility for financial and tax policy, said: "First, let's clarify that we are not talking about an advance payment of income tax, but instead an advance payment of the future defense tax."
"The most important regulations on how the defense tax is to be collected from firms should be clarified by the end of August," Liivamägi went on.
The Reform-SDE-Eesti 200 coalition agreement signed last month included an item on the state collecting a 2 percent income tax on corporate profits, starting 2026.
The Ministry of Finance has said it wants to take in the tax in advance, to ensure it gets received in the same year the tax is implemented.
While referenced as a defense or national security tax, both the agreement and when taken from a tax technical perspective, it constitutes an income tax that will apply to corporate profits.
Up to now, the lack of a corporate income tax payable on profits if reinvested into the company, rather than paid out as dividends, had been an unusual selling point for Estonia's tax system, which had reportedly appealed to many who have set up businesses here, including via the e-Residency program.
According to the program, 115,800 people from 185 nations have obtained e-resident status since the scheme was launched a decade ago, while these e-residents have between them set up around 31,400 companies.
Liina Vahtras also stressed that e-residency does not confer citizenship, temporary or permanent residency or the right to enter either Estonia or the EU.
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Editor: Andrew Whyte
