This article is for one particular situation: you are a Russian tax resident and you have (or are about to have) an Estonian company. There are a lot of half-truths in circulation about this — from “Estonia is in the European Union, so everything there is covered by a treaty” to “the main thing is not to stand out”. Below, in short, is how matters actually stand.
The most important point first. There is no double taxation treaty in force between Estonia and Russia. The treaty was indeed signed in 2002 and Estonia ratified it in 2004, but it has never entered into force. In the official overview of the Ministry of Finance, Russia is still in the section “in preparation”, not among the treaties in force. Estonia has concluded 66 treaties that are in force — Russia is not among them.
In practice this means one thing: taxes are not offset between these two countries. Tax paid in Estonia and personal tax payable in Russia are two separate layers. One does not reduce the other. Anyone who hopes that tax paid in Europe can be deducted in Russia is building castles in the air.
The Estonian side is simple and predictable
The Estonian side is the part that is public and clear.
A company pays income tax only when it distributes profit. As long as the profit stays in the company, no income tax arises. When profit is distributed, the rate is 22/78 — which corresponds to 22% of the profit earned (before tax). Since 2025 this is the only rate; the earlier lower rate of 14/86 no longer applies.
That is the whole Estonian side. There is not a single hidden trap — the rules are the same for everyone and you can see them in advance.
The Russian side is the hard part
The complicated part is not in Estonia, but in Russia.
The obligations of a Russian tax resident are governed entirely by Russian law, not by Estonian law. And an important nuance: some of these obligations may arise from merely owning the company — even if not a cent has been paid out of it. Duties to declare and to notify do not wait for a dividend to be paid out.
This is where people go wrong most often. The Estonian side is simple and public; the Russian side has to be reviewed under Russian rules, on the basis of your particular situation. There is no general answer here — there is only yours.
A short summary
Estonia is in the EU — does a common treaty not cover this?
No. Double taxation treaties are bilateral; membership of the EU does not replace them. In the Estonia–Russia pair, there has never been a treaty in force.
And what if the profit is not distributed?
Then no Estonian income tax arises — that is a basic feature of the Estonian system. The Russian side still has to be reviewed separately, under Russian rules.
This article was prepared with the help of artificial intelligence.