--- title: Dividends and related changes in 2018 date: 2017-10-02T11:35:45Z modified: 2017-10-02T11:35:45Z permalink: &quot;https://grow.ee/dividendid-ja-nendega-seotud-muudatused-aastal-2018/&quot; type: post status: publish excerpt: If the dividend tax rate was 20% until now, then when distributing next year&#039;s profit, it will be possible to use the 14% income tax rate, if dividends have been paid in the previous three years. wpid: 4717 timestamp: 2017-10-02T11:35:45Z tags: - Accounting --- Dividends and related changes in 2018 If the dividend tax rate was 20% until now, then when distributing next year&#039;s profit, it will be possible to use the 14% income tax rate, if dividends have been paid in the previous three years. However, this is not a change that will apply to everyone, as this significant decrease requires two conditions to be met – **dividends must be paid to a legal entity and this must be done regularly**. Thus, for the end consumer or company owner living in Estonia, the income tax percentage will remain the same. We draw your attention to the following circumstances: - The 14% income tax rate can be applied to the profit of 2018, or **dividends paid from 2019 onwards**. - There is a 2-year transition period, where the average dividend paid is based on dividend payments made since 2018. - So if you paid dividends in 2018, then in 2019 there is an opportunity to tax the same amount with 14% income tax. Next year it will be a 2-year average and from then on the 3-year average will apply. - Since there are still legal inconsistencies in the law regarding net and gross dividends with the implementation of 14%, we hope that they will be resolved before it is used. A company that has received dividends with 14% income tax and pays these dividends to a private owner **must pay 7% income tax**. The OECD Estonian Economic Review states that the planned income tax reduction to 14 percent of distributed dividends if a company has paid dividends for at least three consecutive years **will not have any positive impact on increasing investment by domestic companies**, because reinvested profits are tax-free anyway. Do you need help with dividend-related issues? If you are unsure about some aspects related to dividend payments, feel free to contact Grow accountants. Since the [online accounting service](/?p=4623) we offer includes **the years of experience of all our accountants**, we can easily arrange complex operations for you. Call us at 5629 3090 or send an e-mail to <info@grow.ee> ja teeme sulle parima pakkumise!