Property Taxes in Estonia

Nonresidents are liable to pay taxes on their income from Estonian sources. Nonresident married couples are taxed separately.

A joint tax return may be filed if the following conditions are met:

  1. One of the spouses is a resident of Estonia and the other spouse is a resident of another EU member state who has received at least 75% of their taxable income from Estonian sources.
  2. Both spouses are residents of another EU member state and have received at least 75% of their income for the tax year from Estonian sources.

In the case of jointly filing income tax returns, the aggregate taxable income is divided equally between the spouses.

Income Tax

Nonresidents are liable to pay taxes on their income from Estonian sources at a flat rate of 20%.

Rental Income Tax

Nonresident individuals earning income through renting out Estonian property are liable to pay income tax. Income earned from rental payments is subject to the flat income tax rate of 20%. This is taxed by way of withholding, which are final taxes and does not obligate the nonresident recipient to file returns. Deductions of up to 20% are allowed based on proof of real expenses related to the property.

Capital Gains Tax

Capital gains are included in the computation for taxable income and taxed at the standard rate of 20%. Income of nonresidents from the sale of property is subject to income tax by way of assessment. Taxable capital gain is generally computed as gross selling price less acquisition costs. Gains from the sale of a summer cottage or garden house are exempt if owned for more than 2 years.

Corporate Taxation

Distribution Tax: Income and capital gains earned by companies are subject to distribution tax on the company´s distributed profits. Profit distributions may be specific, such as dividends, share distributions via capital reductions, and deemed, which may include expenditure and payments unrelated to business activities, gifts, and donations. The distribution tax is levied at a rate of 20/80 of the net amount or 20% of the gross amount of the profit distribution.

Transaction Costs

Transaction Costs
    Who Pays?
Registration Fee 0.00% buyer
Legal Fees 0.50% buyer
Notary Fees 0.02% - 0.70% (+22% VAT) buyer/seller split
Real Estate Agent Fee 2.00% - 3.00% seller
Costs paid by Buyer 0.52% - 1.20%  
Costs paid by Seller 2.00% - 3.00%
ROUNDTRIP TRANSACTION COSTS 2.52% - 4.20%
Source: Global Property Guide, PWC

Property Holding Tax

Land in Estonia is subject to annual land tax, levied on the market value of the land. The rate is established by the municipal council and varies between 0.1% and 1.0%. Land tax is generally paid by land owners, but users may be liable to pay the tax in some cases. Land tax is generally payable in two installments, every 31 March and 1 October.

As of 2024, Estonia is planning to raise its property taxes in the coming years.