How to Pay a Dividend from an Estonian Company to a Foreign Shareholder? Taxes 2026
In this article, you will learn that:
- Paying a dividend from an OÜ triggers 22% CIT at company level (calculated as 22/78 of the net amount distributed), regardless of the shareholder’s residence or ownership structure.
- Since 2025, Estonia has abolished all withholding tax (WHT) on dividends paid to non-residents. The net dividend amount reaches the shareholder’s account without any additional Estonian deductions.
- Dividends from an OÜ are not subject to social security contributions in most jurisdictions, including Poland.
- Paying a dividend requires an approved annual financial report. Without it, any distribution is unlawful under Estonian law.
- The entire process, from the shareholders’ resolution to the SEPA transfer, can be completed fully remotely, without visiting Tallinn.
- How the dividend is taxed in your country of residence depends on your individual tax situation and requires consultation with a local tax advisor.
Thompson&Stein, through its accounting affiliate Nexa.tax, handles the entire dividend payment process, from the annual report through the TSD declaration to documentation for the shareholder.
See how comprehensive OÜ company formation in Estonia works — go to the service page and learn the details of registration, legal support, and accounting.
How to Pay a Dividend from an Estonian Company to a Foreign Shareholder? Taxes 2026
Paying a dividend from an Estonian OÜ triggers 22% CIT at company level. This is the only tax charge on the Estonian side. Since 2025, Estonia no longer withholds any tax on dividends, so the net amount goes directly to the shareholder’s account. Below, we explain the full process step by step: what Estonian law requires, how the numbers work, and what to prepare before your first distribution.
The question of dividends typically arises at one of two points: before registering an OÜ, when an entrepreneur is mapping out the real tax cost, or after several years of operation, when profits have accumulated and the time for distribution has come. In both cases, understanding the Estonian CIT mechanism is the starting point for any further planning.
The Estonian CIT System: How Taxation of OÜ Actually Works
The Estonian tax system stands out in the EU for one fundamental principle: an OÜ pays no corporate income tax on retained profits. Tax arises only at the moment of distribution, covering dividend payments, benefits to shareholders, or any other form of profit withdrawal from the company.
This means profits can work inside the company for years, funding growth with no tax drag. CIT appears precisely when the shareholder decides to distribute.
CIT Rate on Distribution in 2026
From 1 January 2025, only one rate applies: 22/78. The reduced 14/86 rate for regularly distributed dividends, which existed until end of 2024, has been abolished. The mechanics: when the company pays a shareholder 78,000 EUR net, it remits 78,000 × 22/78 = 22,000 EUR CIT to EMTA. Total distribution cost for the company: 100,000 EUR.
CIT is the company’s liability, not the shareholder’s. The OÜ calculates, declares, and pays the tax. The shareholder does not appear as a taxpayer on the Estonian side.
No WHT on Dividends: What Changed from 2025
Until end of 2024, Estonia withheld 7% tax on dividends paid to non-resident natural persons. From 1 January 2025, WHT on dividends no longer exists, for either individuals or legal entities. The net dividend reaches the shareholder’s account without any Estonian deductions.
Item | Until end of 2024 | From 2025 (applicable in 2026) |
CIT rate on distribution | 20/80 or 14/86 (regular) | 22/78 (uniform) |
WHT for non-resident individuals | 7% | None |
WHT for non-resident legal entities | None | None |
See how comprehensive OÜ company formation in Estonia works — go to the service page and learn the details of registration, legal support, and accounting.
Dividend from OÜ and Social Security Contributions
One of the most frequent concerns among OÜ shareholders. The answer is clear: a dividend from an Estonian OÜ is not subject to social security contributions in most jurisdictions. It constitutes income from participation in the profits of a legal entity, not employment income, self-employment income, or business income in the sense that would trigger contribution obligations.
That said, the treatment of dividend income for social security purposes varies by country. If you are a resident of a jurisdiction outside the EU or EEA, or if your situation involves multiple income sources or business structures, we recommend verifying your specific obligations with a local advisor.
Taxation of the Dividend in Your Country of Residence
The Estonian side is straightforward: 22% CIT paid by the company, no WHT, net amount to the shareholder. How that dividend is then taxed in your country of residence depends on your individual circumstances, including your residency status, the structure of your income, applicable double tax treaties, and local tax law.
This is an area where we strongly recommend consulting a qualified tax advisor in your jurisdiction. Errors in reporting foreign dividend income are among the most common and costly issues identified by tax authorities. If you would like to discuss your situation comprehensively, contact our team at Thompson&Stein.
How Much Does the Shareholder Receive? Worked Example
The company OÜ sets aside 100,000 EUR for a dividend distribution to its sole shareholder.
- Company calculates CIT: 78,000 EUR (net) × 22/78 = 22,000 EUR payable to EMTA.
- Amount credited to shareholder’s account: 78,000 EUR.
- Shareholder reports the dividend in their country of residence according to their individual tax situation, in consultation with a local advisor.
Level | Party | Amount (from 100,000 EUR gross) |
Estonian CIT (22/78 of net) | OÜ company | 22,000 EUR |
Tax in country of residence | Shareholder | Depends on individual situation |
Net amount to shareholder (before local tax) |
Step by Step: How to Execute a Dividend Payment from an OÜ
The entire process can be completed fully remotely, without visiting Tallinn and without requiring Estonian e-Residency. Below are five steps covering every dividend distribution from an OÜ, supported by Nexa.tax, the accounting arm of Thompson&Stein.
Step 1. Approval of the Annual Financial Report
A dividend may only be paid from approved net profit. The OÜ’s financial year ends on 31 December, and the company must file its annual report with the Estonian Business Register by 30 June of the following year. Without a filed report, any distribution is unlawful under Estonian law.
The annual report is prepared by Nexa.tax. The cost of this service starts from 500 EUR net per year.
Step 2. Shareholders’ Resolution on Profit Distribution
The shareholders adopt a resolution specifying the amount to be distributed, the payment date, and the beneficiary’s account. Estonian law (Äriseadustik) allows resolutions to be passed electronically, without a formal general meeting, provided all shareholders give written or electronic consent. For a sole shareholder, the procedure is particularly straightforward.
Step 3. TSD Declaration and CIT Payment
Before the distribution, the company must declare it and pay CIT to EMTA. This is done via the monthly TSD declaration (Annex 7), which the company files and pays by the 10th day of the month following the month in which the resolution was adopted.
Example: resolution adopted in June 2026, TSD declaration and CIT payment due by 10 July 2026.
Step 4. Net Dividend Transfer
After settling CIT, the company transfers the net amount to the shareholder’s bank account. A SEPA transfer from an OÜ account held at LHV Bank, SEB, Swedbank, or Wise Business is completed within 1 to 2 business days.
Step 5. Documentation for the Shareholder
The OÜ issues a dividend payment confirmation stating the gross and net amounts. This document is essential for correct tax reporting in the shareholder’s country of residence, whatever form that reporting takes.
Parent-Subsidiary Directive and OÜ Dividends
The Parent-Subsidiary Directive (2011/96/EU) exempts dividends from withholding tax when paid to a parent company holding at least 10% of shares for 12 months. Since Estonia abolished WHT on dividends entirely from 2025, the Directive has no practical effect on standard cash distributions.
The Directive remains relevant, however, in holding structures: where a company in another EU member state receives dividends from an Estonian OÜ and meets the shareholding conditions, it may qualify for an exemption from dividend taxation under domestic law implementing the Directive. This is a structure worth analysing for shareholders generating significant annual profits. Our team at Thompson&Stein advises on cross-border holding arrangements as part of our corporate advisory service.
Frequently Asked Questions
How much tax is charged on an OÜ dividend on the Estonian side?
The only Estonian charge is 22% CIT paid by the company (calculated as 22/78 of the net dividend amount). Since 2025, Estonia applies no withholding tax on dividends paid to non-residents.
Does Estonia withhold tax on dividends for foreign shareholders?
No. From 1 January 2025, WHT on dividends no longer applies in Estonia, for either individuals or legal entities, regardless of the shareholder’s country of residence.
Can I pay a dividend without visiting Estonia?
Yes. The entire process, covering the resolution, TSD declaration, and transfer, is handled remotely. No presence in Tallinn and no Estonian e-Residency are required.
When can a dividend be paid?
After the annual financial report for the profit year has been approved and filed. The filing deadline is 30 June. Distribution from retained earnings of previous years is also possible, provided the reports for those years have been filed.
How is the dividend taxed in my country?
This depends on your individual tax situation and the applicable tax treaty between Estonia and your country of residence. We recommend consulting a qualified tax advisor in your jurisdiction. If you would like to discuss your case from both the Estonian and local perspective, contact our team at Thompson&Stein.
Does Thompson&Stein handle the full dividend process?
Yes. Nexa.tax, the accounting affiliate within Thompson&Stein, covers the full cycle: annual report preparation, TSD filing, CIT calculation and payment, and shareholder documentation. Details at thompsonstein.com/contact.
Summary
Paying a dividend from an Estonian OÜ is a transparent process on the Estonian side: 22% CIT is paid by the company, there is no WHT, and the net amount goes directly to the shareholder. The full process can be completed remotely in five steps, from the resolution through the TSD declaration to the SEPA transfer.
How the dividend is then taxed in your country of residence depends on your individual situation and requires separate advice from a qualified local tax advisor. At Thompson&Stein, we support the full journey: from OÜ registration and ongoing accounting through Nexa.tax, to dividend processing and coordination with local advisors in your jurisdiction.
Contact our team: thompsonstein.com/contact
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