Property Taxes in Estonia 2025/2026

Taxes on the purchase of real estate in Estonia

Purchasing real estate in Estonia in 2025 comes with a relatively straightforward and transparent tax system, making it one of the most appealing countries in the European Union for investing in residential and commercial property. Unlike most European countries, Estonia does not levy a real estate transfer tax. Instead of paying a percentage of the transaction value, the buyer only incurs fixed costs, including a state fee for registering ownership in the Land Registry and notary services. This fee is typically around €64 for submitting a registration application, while notary fees depend on the transaction value and the complexity of the contract.

If a new property or an object related to entrepreneurial activity is purchased, value added tax (VAT) may apply. From 2025, the standard VAT rate in Estonia will be 24%. VAT is not usually charged to ordinary individuals purchasing a home for personal use, but it is included in the price when purchasing commercial premises or new buildings. This should be taken into account when budgeting for the transaction, especially if the property is being purchased through a legal entity for subsequent rental or sale purposes.

The tax regime does not depend on the nationality or status of the buyer. Non-residents can purchase property in Estonia on the same terms as residents, without facing additional taxes or restrictions. Exceptions may apply only to specific areas related to national security or agricultural land, but such cases are rare. At the same time, foreign buyers should consider not only the direct costs of the purchase, but also their future tax obligations relating to owning and selling the property.

In addition to the purchase price, investors must factor in the annual costs of maintaining the property and paying land tax. When selling the property, there may be capital gains tax liability. From 2025, the personal income tax rate in Estonia will be 22%. This applies to profits from the sale of real estate – the difference between the sale price and the purchase price, adjusted for documented expenses. However, there are exceptions for Estonian residents – for instance, capital gains tax is not payable when selling a residential property that was used as the owner’s primary residence. Non-residents selling real estate located in Estonia are also subject to taxation in Estonia, regardless of their country of residence.

If the purchased property is used for rental purposes, rental income is taxed at a rate of 20–22%, depending on the owner’s tax status. For legal entities registered in Estonia, tax is only payable when profits are distributed, making the use of a company advantageous for long-term property ownership and income reinvestment. For individuals, tax is withheld from gross income, but confirmed maintenance and repair costs can be taken into account.

Thus, when purchasing real estate in Estonia, the buyer does not face high transaction taxes. The main expenses are limited to notary and registration fees, and subsequent tax obligations mainly relate to land tax and possible income tax when selling or renting out the property. Estonia offers foreign investors a transparent and digitised registration and taxation system, ensuring predictability of costs and a high level of property rights protection. Tax optimisation can be achieved by selecting the appropriate ownership structure – as an individual or through a registered company – depending on the purpose of the purchase.

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The cost of legal and notary services when purchasing real estate in Estonia remains moderate compared to most European Union countries

In 2025, these fees will remain moderate compared to most European Union countries. These fees consist of two main components: notarisation of the transaction and legal support, including verification of the property, preparation of the purchase agreement, and registration of ownership rights.

Notary services are mandatory for all real estate transactions in Estonia, as the notary certifies the contract, verifies the identity of the parties involved, enters the relevant data into the land register, and ensures the legal validity of the transaction. The amount of the notary fee depends on the property’s value and is regulated by an approved tariff scale. On average, the notary fee ranges from 0.02% to 0.70% of the transaction price, plus VAT. For a property valued at €300,000, the total notary fees are typically €1,000–1,500.

In addition to the notary fee, costs are incurred for legal support of the transaction. This includes analysing title documents, verifying the property’s status in the land register, identifying possible encumbrances, debts or legal restrictions, and preparing and coordinating the draft purchase agreement. Legal services for a standard transaction cost around 0.5% of the property value – approximately €1,500 for a property worth €300,000. If a foreign buyer is involved, if the purchase is made through a legal entity or if notarised translations of documents are required, the costs may be slightly higher.

Additionally, a state fee is payable for registering ownership in the Land Registry – a fixed amount of around €64 – as well as the cost of translating and notarising foreign documents, which averages at around €100–300.

Therefore, when purchasing real estate in Estonia worth €300,000, the total legal and notary fees will amount to around €2,500–3,000. This amount includes full legal support, notary services, and registration of ownership rights. For more complex transactions, such as purchasing through a company, with mortgage financing, or involving multiple owners, the costs may increase to €3,500–4,000 – still a moderate figure by European standards.

In Estonia, legal support plays an important role in protecting the buyer’s interests, ensuring the transparency of the transaction and the accuracy of all documents, and guaranteeing the security of the transfer of ownership. Taken together, the relatively low costs, mandatory notarisation and high degree of digitisation of the cadastral system make Estonia one of the safest and most predictable jurisdictions in the European Union for purchasing real estate.

The cost of real estate agent services when purchasing property in Estonia

When buying real estate in Estonia, realtors’ (real estate agents’) services are most often paid for by the seller. At the same time, buyers may find themselves in situations where the search agent works specifically with them and charges a separate commission.

Basic commission parameters

When selling residential property in Estonia, the typical agency commission rate is around 2–4% of the transaction price.
For buyer’s agent services, the range is approximately 1–1.5% of the property value.
It is important to specify in contracts with an agent who pays (the seller or the buyer), whether the commission is included in the property price, and what services the commission covers.

Practical calculation:

If you are a buyer considering a property worth €300,000 and a buyer’s agent with a commission of around 1% is required, the calculation would be:

1% of €300,000 is €3,000.
If the rate is closer to 1.5%, it is €4,500.
If the seller pays for the agency services and there is no additional commission for the buyer, your direct expenses for the agent may be zero.

When planning your budget for buying a property in Estonia worth €300,000, it is worth factoring in potential estate agent commission costs of €3,000–4,500 if you are responsible for paying the agent’s commission. If the seller pays the agent, this cost can be omitted.
We recommend clearly specifying the amount and procedure for paying the commission, as well as the conditions for its return or reduction if the buyer finds the property themselves or the transaction does not take place, in the contract when negotiating with an agent.

Property taxes in Estonia

Ownership of real estate in Estonia in 2025 is subject to only one main tax: land tax. There is no separate tax on buildings or structures, which significantly reduces the overall tax burden on owners compared to most European Union countries. Land tax is paid annually by the owner of the land, whether they are a resident or non-resident of Estonia.

The basis for calculating land tax is the cadastral value of the land, which is determined by the state based on a mass appraisal. Municipalities set the tax rate, which ranges from 0.1% to 1% of the land’s taxable value. For residential development plots or privately owned land, a rate of around 0.5% is most commonly applied. For land used for commercial purposes, such as rental or commercial property, the tax rate can range from 0.1% to 0.5%. In some municipalities, where land is used for industrial or transport purposes, the rate can be as high as 2%. From 2025, the Estonian capital Tallinn will apply rates of 0.5% for residential and income-generating plots, and 1% for other types of plot.

The introduction of a single land tax will make Estonia’s real estate taxation system transparent and predictable. Owners pay tax only on the land, regardless of the number or type of buildings on the plot. This is particularly beneficial for owners of flats and houses, as the buildings themselves are not taxed. The state has also set a limit on sharp increases in tax: it cannot increase by more than 50% in one year compared to the previous period. This protects owners from sudden increases in tax payments due to changes in cadastral valuation.

Tax breaks are available for permanent Estonian residents. If a plot is used as a main residence and its area does not exceed legal standards, the owner may be partially or fully exempt from land tax. These concessions usually do not apply to foreign citizens, except in cases where they have resident status and actually live in Estonia.

The annual land tax is based on the cadastral value of the plot, which is typically lower than the market price, thereby reducing the tax burden further. On average, the annual land tax on a standard plot of land for a residential building in Tallinn is several hundred euros. Payments are made once a year, usually in the first quarter, and information on accruals is available electronically through the tax service portal.

It is important for owners who use their property for commercial purposes to note that a plot of land used for income-generating purposes may be classified at a lower land tax rate (up to 0.5%), but income from renting or business activities is subject to income tax according to separate rules.

Thus, Estonia’s tax system for real estate ownership is simple and stable. Owners only pay land tax, at moderate rates, and the payment procedure is fully automated. The absence of property tax and the possibility of partial land tax exemption make Estonia one of the most attractive European jurisdictions for long-term residential and investment property ownership.

Taxes on short-term property rentals in Estonia

Short-term property rentals in Estonia in 2025 are clearly regulated and treated as income from the provision of accommodation services. This type of activity is subject to income tax and, in certain cases, value added tax. The Estonian tax system provides different approaches depending on whether the landlord is an individual renting out their own apartment occasionally or engaged in business activities on a permanent basis.

Income from short-term rentals is subject to a 22% tax rate. This tax is levied on net profit, i.e. the difference between gross income and property maintenance expenses. If the landlord is an individual, they can reduce the tax base by 20% without providing evidence of expenses. This approach applies to most private owners who rent out property irregularly or without third-party involvement. However, if property rental is systematic, covers several properties, or is carried out through platforms such as Airbnb or Booking.com, the tax authorities may classify it as entrepreneurial activity. In this case, the owner must keep records of income and expenses, register as a sole trader, and submit regular reports.

The same taxation rules apply to residents and non-residents of Estonia: income tax is paid in Estonia if the property is located in the country. Non-residents only declare income received from Estonian sources. If the property belongs to a foreign owner, rental income may be taxed at source at a rate of 22%, or the owner may declare it through a tax return.

Short-term rentals effectively constitute a guest accommodation service and may therefore require registration as a VAT payer. The threshold for VAT registration in Estonia is an annual turnover of €40,000. If rental income exceeds this limit, the owner must register as a taxpayer and charge VAT on their services. From 2025, the VAT rate for accommodation services will be set at 13%. This rule applies to tourist accommodation activities, such as the short-term rental of flats, houses and apartments, which are similar to hotels and guest houses.

However, if the property is rented on a long-term basis for the tenant’s permanent residence, VAT is not charged. However, for short-term rentals for tourist purposes, especially through digital platforms, VAT becomes a mandatory element of taxation. In this case, the owner can take into account costs associated with maintaining and repairing the property when calculating tax.

From 2023, Estonia will introduce an automatic data exchange system between the tax authorities and international online platforms. This means that information about income from short-term rentals received through Airbnb, Booking.com and similar services will be transferred directly to the tax authorities. Therefore, it will be impossible to hide such income, and owners are advised to declare their profits promptly to avoid fines and additional charges.

When renting out property on a short-term basis, owners must consider not only taxation, but also municipal requirements. In some Estonian cities, including Tallinn and Tartu, there may be additional restrictions on the number of properties available for rental or the length of rental periods for tourism purposes. Additionally, landlords are obliged to ensure that their accommodation meets all necessary safety standards and to register guests if the rental is on a permanent basis.

Overall, the tax burden for short-term rentals in Estonia comprises income tax at a rate of 22%, plus possible VAT at a rate of 13% if the registration threshold is exceeded. Despite the need to comply with formalities, the tax regime remains fairly flexible and straightforward. With proper registration and expense planning, the owner can optimise their tax liability and legally earn income from tourist rentals. Estonia provides a transparent digital accounting system, making the process of filing returns and paying taxes convenient and safe for all market participants.

Taxes on long-term property rentals in Estonia

Long-term property rentals in Estonia in 2025 are regulated under the standard taxation regime for individuals and legal entities. The main tax for owners is income tax, and the system of taxation depends on the form of ownership – whether the owner is an individual, a sole proprietor, or a legal entity. Estonian legislation offers transparent and predictable rules, and the tax burden remains moderate compared to other European Union countries.

If a private individual rents out a property without registering a business, all rental income is subject to taxation at a rate of 22%. This tax is calculated on net income, taking into account eligible property maintenance expenses. Alternatively, an individual can reduce the taxable base by 20% of gross income without having to document expenses, which is a simplified procedure. For example, if you receive €10,000 per year from rent, tax will only be levied on €8,000. Alternatively, if the landlord wishes to write off actual expenses, they can document and deduct these from their income. Such expenses include utility bills, repairs, insurance, building maintenance, commission to an agent or management company, and mortgage interest.

For Estonian residents, the taxable income is determined based on an annual tax return, which must be submitted by the end of April the year after the reporting year. Tax is paid once the return has been approved, and the tax authority provides an electronic calculation in the taxpayer’s personal account. Income from renting out property located in Estonia is also taxed at a rate of 22% for non-residents of the country. This tax can be withheld at source or paid through a tax return. In most cases, a non-resident can reduce the tax base by 20% if the income qualifies as rental income rather than business income.

However, if the property is regularly rented out over a long period of time and exhibits characteristics of entrepreneurial activity (e.g. renting out several properties or the involvement of a management company), the tax authorities may require registration as a sole trader. In this case, income is taxed at the same rates, but taxpayers can take into account all actual expenses and apply deductions for contributions to pension and health insurance systems.

Value added tax is not usually applied to long-term rentals. In Estonia, the letting of residential property is exempt from VAT. However, exceptions apply where the tenant is a legal entity using the premises for commercial purposes or where the property is let as part of a business activity involving voluntary registration as a VAT payer. In such cases, a rate of 24% may be applied to the rent. However, VAT is not charged on classic residential rentals between individuals.

In addition to income tax, the owner must pay an annual land tax levied on the plot of land on which the property is located. Municipalities set land tax rates within a range of 0.1% to 1% of the cadastral value of the land. This tax is mandatory, whether the property is used by the owner for residential purposes or rented out.

Overall, Estonia’s tax system for long-term property rentals remains one of the most transparent and straightforward in the European Union. Property owners only pay income tax on rental income and annual land tax. At the same time, they can legally reduce their tax liability by applying a 20% deduction without providing documentation, or by claiming back the actual expenses incurred.

Example calculation: if a landlord receives €12,000 per year from a long-term apartment rental, they can reduce their income by 20%, leaving a taxable base of €9,600. The 22% tax would amount to €2,112 per year. Thus, the owner’s net income after tax will be €9,888.

Different principles apply to legal entities. A company that owns real estate does not pay income tax until the income is distributed as dividends. This is a classic feature of the Estonian tax model – tax is paid not on profits, but on their distribution. Consequently, rental activities through a company are often employed to reinvest income without incurring current tax liabilities.

Consequently, long-term property rental in Estonia offers a stable source of income with a minimal administrative burden. The absence of property tax, the ability to deduct expenses, and a transparent income tax rate make Estonia an appealing jurisdiction for private owners and investors looking to develop a rental business.

Taxes on the sale of real estate by individuals in Estonia

The sale of real estate by an individual in Estonia in 2025 will be subject to capital gains tax if the transaction results in a profit. Estonia’s tax system in this area is considered one of the most transparent in the European Union, and the tax calculation procedure is straightforward and consistent.

The taxation of real estate sales depends on the nature of ownership and whether the property was used as a primary residence. If an individual sells real estate that was their primary residence, the profit from such a sale is exempt from income tax. This exemption applies only if two conditions are met: the property must have been owned and used as the owner’s permanent residence until the time of sale. The exemption can be claimed once every two years and does not apply to investment or rental property.

If the property does not qualify as a primary residence, the profit from its sale is subject to personal income tax at a rate of 22%. The profit is calculated as the difference between the sale price and the purchase price of the property, taking into account the costs associated with its purchase and sale. Expenses that reduce the tax base include notary and registration fees, estate agent commissions, interest on loans used for purchase and documented repair and improvement costs.

Example calculation: if an individual purchased an apartment for €150,000, invested €10,000 in repairs, and then sold it for €200,000, the taxable profit would be €40,000. At a rate of 22%, the tax payable would be €8,800. All expenses must be supported by documents such as payment orders, invoices, or contracts. If there is no evidence of expenses, the tax authority has the right to calculate the profit as the difference between the purchase and sale prices without making any deductions.

A similar procedure applies to non-residents of Estonia. If the property is located in Estonia, the profit from its sale is taxable in Estonia. Non-residents must file a tax return and pay tax at a rate of 22% on their net profit. However, if there is a double taxation agreement between Estonia and the seller’s country of residence, the agreement may allow for a tax credit or exemption in one of the countries.

These rules also apply to situations where an individual owns several properties. If an individual regularly sells several flats or houses, the tax authorities may classify this as an entrepreneurial activity. In this case, they must register as a sole trader and pay taxes according to the rules for business activities, including social security contributions and value added tax if the turnover exceeds €40,000 per year.

A real estate sale transaction in Estonia must be formalised through a notary. The notary will certify the purchase and sale agreement, supervise the settlements between the parties, and transfer the information to the Land Registry. When selling a property, a tax return must be submitted the following year and the tax paid by the deadline set by the Tax and Customs Board. For residents, this deadline usually coincides with the general deadline for submitting an annual return, which is the end of April.

The Estonian tax system does not provide for withholding tax at source when real estate is sold by an individual, so it is the seller’s responsibility to calculate and pay the tax. At the same time, the tax service has access to data from the land register and bank payments, making the control process transparent and effective.

It is important to note that the tax exemption only applies to residential property used by the owner as their main residence. If the property was rented out, used for business purposes, or held as an investment asset, the exemption does not apply. Additionally, if the owner has a share in the property, the exemption only applies to the portion of the profit proportional to their share.

Overall, the tax burden on the sale of real estate by individuals in Estonia remains moderate and transparent. Capital gains tax at a rate of 22% is levied only on actual profits, not the total transaction amount. Thanks to the possibility of deducting documented expenses and the exemption of primary residences, the Estonian system encourages responsible property ownership, making the market stable and predictable for investors and private owners alike.

Taxes on the sale of real estate by a company in Estonia

The sale of real estate by a company in Estonia in 2025 is regulated within the framework of a corporate tax system based on the principle of deferred taxation of profits. This means that tax is not paid when income is received from the sale of an asset, but only when the profit is distributed among the company’s owners. This approach makes Estonia one of the most favourable jurisdictions in the European Union for real estate-related business, including investment, construction, and leasing.

Provided that the proceeds remain in the company’s turnover or are used for new investments, a company does not pay income tax at the time of selling a property. As long as the profit is not distributed as dividends, there are no tax liabilities. This enables businesses to dispose of the proceeds from the sale as they wish – for example, to purchase new assets, modernise, cover construction costs or refinance.

From 2025 onwards, Estonia will implement a new corporate tax rate of 22/78 on distributed profits, equivalent to an effective rate of 22% of net distributable income. For instance, if a company earns a profit of €100,000 and chooses to distribute it among its shareholders, it must pay tax at a rate of 22/78 – equivalent to €28,205. Consequently, shareholders will receive €100,000 in dividends, and the company’s total expenses will total €128,205.

If the profit is not distributed, no tax is levied. Therefore, the retained profit can be fully reinvested without incurring additional fiscal costs. This system encourages business development by enabling legal entities to remain competitive and liquid.

The sale of real estate may be subject to different tax regimes depending on the property’s ownership. For example, if the property was used for commercial purposes and rented out, the income from its sale would be considered part of the business turnover. If the property was purchased as an investment asset, however, the profit from its sale is subject to corporate tax only when distributed. In both cases, the same principle applies: tax is levied exclusively on the payment of dividends.

When selling real estate subject to VAT, the company must charge VAT at a rate of 24%. This rule applies to new buildings that have been in operation for less than two years, and to properties sold as part of business activities. Residential property that has been in use for more than two years is exempt from VAT. However, the parties to the transaction – the seller and the buyer – may mutually agree to apply VAT if the buyer is a taxpayer entitled to a deduction, which is often used in transactions involving commercial premises.

It should be noted that Estonia does not have a classic capital gains tax for legal entities. Proceeds from the sale of real estate are included in the company’s overall financial results and are only subject to taxation when distributed among shareholders. This is a key advantage of the Estonian model, distinguishing it from the systems of most European countries where tax is paid immediately after the sale of an asset.

In addition to corporate tax, companies that own real estate pay an annual land tax, which is levied on the land rather than the building itself. The land tax rate is set by municipalities and varies from 0.1% to 1% of the land’s cadastral value. This tax is mandatory and is classified as an operating expense, but it does not affect the tax base upon sale.

The same tax rules apply to foreign companies that own real estate in Estonia through local subsidiaries. If the property belongs to a company registered in Estonia, the Estonian deferred taxation model applies. However, if a foreign organisation owns the property directly without establishing a permanent establishment, tax liabilities may arise upon the establishment being recognised, which is determined on a case-by-case basis.

Real estate sale transactions are notarised, after which the notary enters the ownership transfer data into the Land Register. For commercial sales, electronic reporting is provided through the e-MTA system, where companies declare profit distributions and corporate tax payments.

Therefore, the sale of real estate by a company in Estonia in 2025 will only be subject to income tax when dividends are distributed, at a rate of 22/78. This makes the jurisdiction particularly attractive for investment and development structures. The absence of capital gains tax, the flexibility to apply VAT and the ability to reinvest profits without immediate taxation create favourable conditions for long-term projects. To optimise their tax burden, companies are advised to plan their profit distribution in line with investment cycles, taking advantage of the Estonian model of deferred corporate taxation.