Taxation of licence fees (intellectual) property in Estonia


Pursuant to the Income Tax Act, income tax is charged on consideration for transfer of the right to use a copyright of an intellectual property*, received as royalties.

The license fee generally shall be withheld on the payment of a royalty by a company resident in Estonia.

The withholding tax rate of license fee is usually 10%, unless for cross-border transactions the tax treaty does not provide for a more favorable tax rate.

In the case of cross-border transactions, it has to be checked whether a tax treaty has been concluded between Estonia and that country. The purpose of the tax treaties is to avoid double taxation, and if Estonia has a contract with the licensee, the tax treaty must be applied.

List of tax treaties concluded with Estonia can be found here Link.

* literary, artistic or scientific work, including cinematographic films or videos, recordings of radio or television programs or computer programs.