As a Xolo Leap customer, we aim to keep you informed about changes to Estonian tax laws that may impact your business. In this short article, we'll quickly outline the key taxation updates you need to know for 2025, ensuring you're always ahead of the curve.
9 updates to Estonian taxes for Leap users in 2025
Most updates listed here have been confirmed by the Estonian Tax Authority already. You may see a few changes that are marked as unconfirmed. Our team at Xolo will be certain to fill you in when these changes are put into place or forgotten.
Confirmed 2025 changes to Estonian taxation
- Tax-Free minimum increase
Starting in 2025, the tax-free minimum in Estonia will increase from €654 per month to €700 per month. This change aims to provide relief to individuals, allowing them to retain more of their hard-earned income.
✔️ Confirmed by the Estonian Tax Authority
✔️ Applies to Estonian tax residents
- Income tax rate changes
Get ready for a slight adjustment in income tax rates! As of 2025, the income tax rate will rise from 20% to 22%. This change affects all payments and payouts, including dividends. If you are planning a dividend payout in the following months, it might make sense to do it this year before the tax increase kicks in.
✔️ Confirmed by the Estonian Tax Authority
✔️ Impacts all Estonian companies
- No reduced income tax rate for regular dividend payments
In the past, regular dividend payments enjoyed a reduced income tax rate. However, starting in 2025, this benefit will no longer apply.
✔️ Confirmed by the Estonian Tax Authority
✔️ Affects all companies making regular dividend payments
- Added complexity to Car Tax calculations
From now on, car tax calculations will become more intricate, taking into account traffic register information. Don't fear! Xolo has you covered! The Estonian Tax Authority will handle the calculations based on your owned vehicle and you’ll receive updates from them ahead of time.
✔️ Confirmed by the Estonian Tax Authority
✔️ Xolo customers must ensure timely payment of the tax obligation (twice a year)
- E-books and press publications VAT rate increase
A VAT rate hike on e-books and press publications, jumping from 5% to 9% in Estonia, is coming in 2025. For those in the e-commerce and publication industries, this can be a substantial hike.
✔️ Confirmed by the Estonian Tax Authority
✔️ Impacts all sales of e-books and press publications
- Short-term rental accommodations VAT rate increase
This category of purchase will now be taxed at a 13% VAT rate in Estonia, up from the current 9%. Another 4% increase to consider for both merchant and purchaser.
✔️ Confirmed by the Estonian Tax Authority
✔️ Affects all short-term rental accommodation services
Unconfirmed 2025 changes to Estonian taxation
- VAT rate increase (Pending confirmation)
There's a potential VAT rate increase on the horizon, rising from 22% to 24% starting from July 1, 2025. Although not yet confirmed, we'll keep you updated on any developments.
✔️ Unconfirmed at this time
✔️ Xolo will announce when confirmed
- Minimum wage update (Not officially announced)
While not officially announced, the minimum wage might see an increase. We'll keep an eye on this development and share updates as soon as possible.
✔️ Previously published in Dec 2023 (Riigiteataja - Töötasu alammäära kehtestamine)
✔️ New redaction expected in Dec 2024
- Minimum social tax amount (Pending confirmation)
Based on last year's minimum wage (€820), the minimum social tax amount would be €270.60 (33% of €820).
✔️ Amount based on previous year's minimum wage
✔️ Not officially confirmed yet
Xolo is ready to update, and our team of expert accountants is always on the tip-top of these changes. Any modifications or confirmations made to Estonian taxes that affect our customers will be clearly outlined.
If you have any questions, we welcome you to reach out at support@xolo.io.