Becoming a FIE in Estonia: e-Business Register, the €40,000 VAT threshold, and the 33% social tax
An Estonian freelancer registers a sole trader (FIE) in the e-Business Register, watches the €40,000 VAT threshold, and pays flat 22% income tax plus 33% social tax. Standard VAT rose to 24% on 1 July 2025.
This article is general information, not tax advice. Regulations change — verify the current rules with the official sources below before acting.
Estonia is famous for digital-first administration, and registering as a freelancer takes that spirit to heart. Most of the setup happens online, but it's worth understanding the two main routes and where the tax lines sit.
Registration in the e-Business Register
You register a sole trader — a FIE (füüsilisest isikust ettevõtja) — in the e-Business Register (rik.ee). A FIE is you trading in your own name, with no separate legal entity. Many freelancers instead set up an OÜ (private limited company), which offers limited liability and its own tax profile — but that is a company, not a sole trader, and comes with company-level obligations. Choose the FIE route when you want the lightest structure.
The €40,000 VAT threshold
You must register for VAT when your taxable supply exceeds €40,000 from the start of the calendar year, and you have to apply within 3 business days of crossing it. Estonia's standard VAT rate is 24%, having risen from 22% on 1 July 2025. Below the threshold, registration is voluntary — useful if your clients are themselves VAT-registered and you want to reclaim input VAT.
Income tax and social tax
Business income after expenses is taxed at a flat 22% for 2026 — a planned rise to 24% was cancelled in December 2025. Separately, a FIE pays social tax at 33% on business income, declared and paid quarterly through the Tax and Customs Board (EMTA). Because the social tax is a substantial slice on top of income tax, setting aside a fixed portion of each payment keeps the quarterly bills from stinging.
General information about becoming a FIE in Estonia, current as of the review date above, and not tax advice. Thresholds and rates change — confirm current figures with EMTA or a qualified accountant.
Frequently asked questions
When must an Estonian FIE register for VAT?
When taxable supply exceeds €40,000 from the start of the calendar year. You must apply to register within 3 business days of crossing the threshold. Estonia's standard VAT rate is 24%, having risen from 22% on 1 July 2025. Below the threshold, VAT registration is voluntary.
What tax does a FIE pay on business income?
Business income after deducting expenses is taxed at a flat 22% income tax rate for 2026 — a planned rise to 24% was cancelled in December 2025. On top of that, a FIE pays 33% social tax on business income, declared and paid quarterly through the Tax and Customs Board (EMTA).