The main advantage of the Estonian CIT model is reduction of the total PIT and CIT taxation in the case of payment of dividends. In practice this means that the taxpayer can deduct the corporate income tax paid by the company from the personal income tax paid by the shareholder.
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Estonian CIT excludes simultaneous use of other tax incentives. This means that the taxpayer will not be able to claim, for example, R&D relief, the IP Box, or relief for bad debts.
When deciding on Estonian CIT, the taxpayer elects this form of taxation for a period of four years, and can extend it by further periods of four years if it still meets all the conditions for using the Estonian CIT system.
There is no definitive answer to this question, but an advantage of Estonian CIT is deferral of taxation of the company’s income. This means that the income is not taxed until it is distributed for consumption purposes, rather than being taxed during the year when the income is earned. It is thus an advantageous form of taxation for companies seeking to expand their operations. It should be pointed out, however, that if the company decides to abandon this form of taxation, the taxpayer will have to pay income tax for the period when Estonian CIT was claimed, and not at the rate of 9% or 19%, but at 15% or 25%.