How to Distribute Dividends?

When Can I Distribute Dividends?

Dividends can only be distributed after we prepare and submit the annual report, and only if the annual report shows profit and dividends were declared by the business owners.

Once the annual report is submitted, dividends can be distributed up to the maximum specified.

How Many Taxes Do We Pay?

The current dividend tax rate in Estonia is 22%, calculated as 22/78 of the net distributed amount. This means that for every €100 net paid in dividends, the company must pay approximately €28.2 in corporate tax.

For example, if the company wants the shareholder to receive €10,000 net in dividends, it will need to pay €2,820 in corporate tax, for a total cost of €12,820.

Who Receives Dividends?

Dividends must be distributed proportionally to shareholders according to their ownership percentage. For example, if John owns 20% and Anne owns 80%, and the company distributes €5,000 in dividends, John will receive €1,000 and Anne will receive €4,000.

How to Distribute Them?

• The distribution must be made from the company’s business bank account directly to a personal account owned by each shareholder (not to another company or individual). The payment must clearly state the purpose: “dividends payment.”

• Dividends can be distributed only once the annual report has been submitted and only if the company reported a profit. For example, if the company made €5,000 in profit, it can distribute up to €5,000 in dividends (e.g., €1,000 to John and €4,000 to Anne).

Updated on: 02/07/2025