Dividends can be paid by the company from the profits of previous years and only if the annual report has been approved. Therefore, dividends cannot be paid in the first year. The requirement that the company's assets do not decrease below the limit permitted by law, which is a minimum of 2,500 euros in the case of an OÜ, must also be followed.
Dividends paid
The shareholders make a decision to pay out dividends, the latter itself does not yet create an income tax liability. Income tax is paid on dividends after the payment has been made. Since the income tax on the dividends has to be paid next month, it is important to provide the information to the accountant on time.
Dividends received
Please note that the received dividends must also be declared on an ongoing basis. If your company itself has received dividends from someone, they must be declared. In general, income tax has been withheld from them and the declaration remains rather informative. Therefore, if dividends are paid forward from the company, they are generally already exempt from income tax or with a reduced income tax rate.
Declaration and calculation of dividends
Since dividends must be declared on the 10th of the month following the receipt/payment, it is important to forward this information to the accountant in a timely manner, who could declare and pay the corresponding income on time. According to the general rule, the income tax rate in Estonia is 20%, starting from this year, dividend income tax can be withheld at a reduced rate of 14%, if dividend payments are made between companies. For more details, you can read the article by Grow Finance accountant Malle Liivati
From MoneyGenius.
