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Residents pay tax on their worldwide income. Taxable income includes, in particular, income from employment (salaries, wages, bonuses and other remuneration); business income; interest, royalties, rental income; capital gains; alimony payments received; pensions and scholarships (except scholarships financed from state budget or paid on the basis of law). Taxable income does not include dividends paid by Estonian or foreign companies when the underlying profits have already been taxed.
Non-residents pay tax only on their income received from Estonian sources. Income taxable in Estonia includes:
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income from work under a labour contract or contractor's agreement in Estonia;
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income from a business carried on in Estonia;
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interest income received from Estonia (only if it is substantially higher than that on similar debt claims);
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royalties;
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income from the lease of assets located in Estonia;
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gains from disposal of assets located in Estonia;
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directors' fees paid by Estonian enterprises;
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income of a sportsman or an artist from his or her activities in Estonia
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pensions and scholarships.
The tax rate for 2011 is 21% of the taxable income.
Additional information
Estonian Tax and Customs Board: http://www.emta.ee
Ministry of Finance: http://fin.ee/?id=621
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