Estonian company and security tax: details, reports, payments

In this article we will investigate the taxation of an Estonian company with security tax.

For the purpose of this article, we will mostly disregard taxation of private persons and non-residents.

1. Main details

Security tax (julgeolekumaks) is a new type of tax, which is paid from the net profit of an Estonian company earned over a financial year.

This tax will be introduced starting from 1.January.2026 and will be collected till 31.December 2028.

Tax rate is 2%.

2. Tax object and tax payers

Security tax is paid from profit of an Estonian company for a financial year.

Estonian company is liable for declaring and paying own security tax.

Estonian company is also liable for withholding and paying the security tax from taxable payments to private persons.

The declaration with calculation of security tax shall be submitted to the Tax Department till 10th day of 9th month following the financial year for which security tax is calculated.

3. Tax Prepayments

Security tax of Estonian company is prepaid 4 times per year till the 10th day of the 3rd month of each quarter.

Each prepayment makes 1/4 of the tax to be paid from the profit earned in the previous year.

If Estonian company has not yet submitted its annual report for the previous year, then tax is calculated upon the profit earned in the financial year before last.

NB! In 2026 tax will be prepaid only 2 times: on 3rd and 4th quarter in the amount of 1/2 each time.

Overpaid amount of the security tax, shall be deposited on the prepayment account of Estonian company in Tax Department

4. Example

Let’s take a look into a quick example.

In 2027 company earned 100’000 Eur profit.

The total amount of security tax to be paid in 2028 makes:

100’000 * 0,02 = 2’000 Eur.

Since the tax is to be paid 4 times per year, each payment will make 1/4 of the total amount of tax:

2’000 / 4 = 500 Eur.

NB! If tax is paid in 2026 for the profit earned in 2025, then there will only be 2 prepayments and each of them will make 1/2 of the total amount of tax:

2’000 / 2 = 1’000 eur.

5. Summary

Starting from 2026 all Estonian companies are obliged to declare and pay security tax, which makes 2% of the net profit earned in a financial year.

Tax is paid upon prepayment basis 4 times per year.

To calculate the amount of each tax prepayment, taxpayers shall use the net profit earned in the previous financial year (if annual report is submitted) or financial year before last (if annual report is not submitted).

If company overpays the security tax (profit in the current financial year is lower than in the last financial year), the amount of overpaid tax shall be deposited onto prepayment account in Tax Department and can be used to cover further tax obligations.

Tax declaration shall be submitted to the Tax Department till 10.September of the current year for the previous financial year.

6. Accounting and Reporting

The introduction of the security tax creates new challenges and requirements for accounting and reporting of Estonian company.

The practice of submitting annual reports based on bank statements can be costly for business owners, as they will have to pay 2% from the company’s bank balances as of December 31.

Correct calculation of income and expenses in accordance with the internal procedure and the national accounting standard is the key to avoid situations of tax overpayment.

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