Mikroettevõte

Mikroettevõte is an Estonian legal term referring to a micro-enterprise. This classification is used to determine specific tax benefits and regulatory requirements. Generally, a company qualifies as a micro-enterprise if its revenue in the preceding year did not exceed a certain threshold, which is adjusted annually. This threshold is set by Estonian law and is intended to simplify the administrative burden for the smallest businesses.

The primary advantage for a micro-enterprise is a simplified taxation system. Instead of paying corporate income tax on distributed profits, micro-enterprises pay a tax on their total revenue. The tax rate is lower than the standard corporate income tax rate. This system aims to encourage the growth and development of small businesses by allowing them to retain more of their earnings for reinvestment.

However, there are conditions and limitations associated with the micro-enterprise status. Companies must meet specific criteria regarding ownership structure and the type of business activity. For instance, the owner or owners are often expected to be individuals, and certain professional services or activities may not be eligible. The eligibility for the micro-enterprise tax regime is assessed annually, and companies must monitor their revenue to ensure they continue to meet the requirements. If a micro-enterprise's revenue exceeds the threshold, it typically transitions to the standard corporate tax system from the following year.