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Invest in Real Estate in Estonia: Decoding Taxes for Foreign Investors

Promising areas for investment / Legal intricacies in real estate / Newcomer in the real estate market / Cheat sheet for shoppers / World behind the curtain / Expert opinion
18.01.2024
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Invest in Real Estate in Estonia: Decoding Taxes for Foreign Investors

Taxation of real estate for foreign investors in Estonia has its own peculiarities, understanding which can help avoid unwanted surprises.

First, it is important to note that there is no tax on profit from the sale of real estate in Estonia. This makes the country quite attractive for investors planning to purchase property for subsequent resale. However, there is a property tax that is paid annually. The amount of this tax depends on the cadastral value of the property and is set by local authorities.

If you plan to rent out the property, the rental income is subject to profit tax. But there is good news - expenses for repairs, improvements, and maintenance of the property can be taken into account when calculating the tax base.

When purchasing real estate, foreign investors need to consider value-added tax (VAT). VAT is usually included in the price of the property, but it can be refunded if the property is used for commercial purposes.

It is important to remember that tax legislation can change, so it is advisable to consult with a lawyer or tax consultant before buying, selling, or renting property in Estonia.

In conclusion, despite some complexities, Estonia remains a highly attractive country for real estate investments due to its stable economy, transparent tax legislation, and high standard of living.

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