The most expensive mistakes do not begin with stupidity. They begin with the sentence “I read somewhere that...”. Information from forums and groups is usually not wrong — it is simply out of date, or torn out of context. But decisions about real money are made on the basis of it. Here are four common myths and how matters actually stand.
“In Estonia the profit tax is zero”
The zero applies as long as the profit stays in the company. As soon as you take it out as a dividend, the company pays income tax at the rate of 22/78. Since 2025 the lower rate of 14/86 on regularly distributed profit has been abolished — only 22/78 applies (source: emta.ee). On top of that, the dividend is taxed by your own country of residence as well — the one you are a tax resident of. “Zero” is not an exemption. It is a postponement that you choose yourself.
“The company is in Estonia, so the taxes are only in Estonia”
The place of registration and the place of management are two different things. If the company is actually run from the country where you live, that country may treat the company as its own tax resident. Estonia itself says so directly. E-Residency does not change your personal tax residency. Nor is it an immigration program (source: e-resident.gov.ee).
“Just do not file the reports — the company will be deleted by itself”
There is no such thing as “free liquidation”. Between “I stopped filing” and “it was deleted” there is a step-by-step procedure. Under § 61 of the Commercial Register Act, the registrar first sets a term together with a warning:
“If a legal person has not filed the required annual report by the expiry of the term prescribed by law, the registrar shall set the legal person a term for filing the annual report, with a warning of deletion from the register.”
Deletion is possible only when the report is still not filed and at least three months have passed from the due date. In the meantime a penalty payment may be added. The company's assets stay stuck in the proceedings. A public note about the compulsory deletion stays in the register.
“The capital may be 1 cent — so there is no need to think about capital”
Since 1 February 2023 the minimum capital requirement of 2,500 euros has been abolished — one cent per shareholder is now enough. But the net assets requirement remained. Under § 176 of the Commercial Code: “If the net assets of the company are less than one half of the share capital, the shareholders must decide” — which means that the assets have to be brought back to at least one half. The ones that usually fall into the trap are old companies whose share capital is 2,500 euros. A couple of loss-making years — and the net assets drop below 1,250 euros. The registrar checks this with every report.
Notice the pattern: almost every myth was true last year. This year it is not. The rules change every year or two. The safest habit is to check your own knowledge from time to time — not against a forum, but against the source.
This article was prepared with the help of artificial intelligence.