Estonian company (tax only on distributed profit)

An Estonian company pays no corporate income tax on profit it keeps or reinvests; tax is charged only when profit is distributed (as dividends, hidden distributions or non-business expenses), at 22/78 of the net amount, equal to 22% of the gross. It is often opened by non-residents through e-Residency, which is exactly why UK residents get it wrong: an Estonian company run from the UK is UK resident and taxed in the UK.

• Founders who live in Estonia or another low-tax country and reinvest most profit in growth.
• EU-facing digital businesses with genuine Estonian management.

Reviewed 2026-09-29. Research, not advice.