Tulojään

Tulojään is a term of Estonian origin that translates to "income tax." It refers to the tax levied by the Estonian government on the income of individuals and businesses. The Estonian tax system is known for its simplicity and its flat rate structure, which also applies to income tax.

Individuals in Estonia are subject to a flat income tax rate of 20% on their taxable income. This rate applies to wages, salaries, self-employment income, and certain other forms of income. The taxable income is calculated by subtracting allowable deductions and allowances from the gross income. These deductions can include expenses related to employment, certain insurance premiums, and contributions to pension funds.

For businesses, the concept of "tulojään" is also relevant, though the taxation mechanism is different. Estonia has a unique corporate income tax system where profits are taxed only when distributed as dividends. Retained earnings are not subject to corporate income tax. This system is designed to encourage reinvestment of profits within businesses. When dividends are distributed, a 20% corporate income tax is applied to the dividend amount.

The Estonian tax authority, the Estonian Tax and Customs Board (Maksu- ja Tolliamet), is responsible for the administration and collection of tulojään. The system is largely based on self-assessment, with taxpayers expected to report their income accurately. Digitalization plays a significant role in the Estonian tax system, with online portals facilitating tax declarations and payments.