As with any novelty, it's essential to read the fine print.
The lump-sum tax on corporate income, commonly known as the Estonian CIT (or e-CIT), is a relatively new form of corporate taxation. It began gaining particular popularity at the beginning of 2022, when the "Polish Deal" regulations came into effect.
In practice, the Estonian CIT is an alternative CIT taxation system. The key feature of this tax is the deferral of the tax obligation until the moment profits are distributed to shareholders. Choosing this form of taxation can legally and effectively reduce the taxation of profit distributions to shareholders, and it can also improve a company's financial liquidity when profits are retained for further development. However, this form of taxation has specific regulations that must be thoroughly understood.
It should be noted that the Estonian CIT regulations are still new in the tax system and raise many questions, so proper preparation is essential for implementing this form of taxation.
Our law firm's advisors will help you determine whether this taxation system is suitable for your business, and if the answer is affirmative, they will assist in implementing this system together with your company's accounting department. This will make the implementation more efficient and, at the same time, secure.
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