DT6703 - Estonia: Dividends

Estonian tax deducted from dividends paid by an Estonian company at the agreement rate of 15 per cent (5 per cent if the dividend is paid to a UK resident company which controls directly at least 25 per cent of the voting power in the company paying the dividend) qualifies for credit as a direct tax (see INTM164010(c)). The reduction to the above rates is not given where the dividends are effectively connected with (see INTM153110, fifth sub-paragraph) a permanent establishment or fixed base which the recipient has in Estonia.

However, the EC Parent-Subsidiary Directive applies to Estonia from 1 January 2005. This bars the imposition of withholding taxes on dividends paid by a company resident in one Member State of the Community to a company resident in another Member State, where the company receiving the dividends holds a minimum of 20 per cent (from 1 January 2005)of the capital of the company paying the dividend. The level of control required to gain exemption will be 15% from 1 January 2007 and 10% from 1 January 2009.