Tax in Estonia: the 22% flat tax, and the increase that never came

The Estonian tax system is the most straightforward you will encounter as a Dutch citizen: one rate, one allowance, one pre-filled return. But there are two things in it you need to have clear — a rate that has only just changed (and then didn't after all), and a year of emigration that falls in two countries for tax purposes.

The flat tax: 22%, and why some guides say 24%

Estonia levies a flat tax of 22% on income from work. No brackets, no municipal surcharge, no wealth tax. In 2025 an increase to 24% was announced as part of a broader security package — and that increase was scrapped by parliament at the end of 2025. Whoever reads 24% somewhere is reading a guide written between the announcement and the withdrawal. Since 1 January 2026 there is in addition a single tax-free allowance of € 700 per month (€ 8,400 per year) for all working residents, regardless of income.

The return: pre-filled, in minutes

The Estonian tax return opens each year in mid-February and is the showpiece of the digital government: you log in with your ID card, the figures are already there, and most people are done within a few minutes. Refunds usually follow within weeks.

The year of emigration: two returns, one treaty

In the year you move, you are liable to Dutch tax for part of the year and to Estonian tax for the other part. For that year you file the M return in the Netherlands; also adjust your provisional assessment in time, otherwise you keep receiving monthly what you will later have to pay back.

For pensions and AOW (the Dutch state pension), the tax treaty of 1997 applies. Unlike for Spain or Germany, the Belastingdienst has no worked-out country page for Estonia, and the split depends on your mix of AOW, employer pension and annuity. This is the one point where an hour with a tax adviser beforehand pays for itself — not because the system is complicated, but because nobody has written it out for you.

Pension and AOW: what the treaty does say

The main lines are simply in the treaty text. Your private pension and annuity are taxable in your state of residence — Estonia — with one sharp exception: a lump-sum surrender or other non-periodic payment the Netherlands may tax as source state. The AOW falls under the social security provision and the Netherlands may tax it, and the government pension (ABP from public-service employment) likewise stays Dutch. As for assets: a rented-out house in the Netherlands remains fully taxed in the Netherlands (article 6), on dividends the Netherlands may withhold 15% (article 10) and on interest a maximum of 10% (article 11).

The healthcare side: the lowest country-of-residence factor of all corridors

Whoever comes with a Dutch pension and does not work becomes a treaty beneficiary via the CAK: you hand in the S1 form at Tervisekassa, and you pay the CAK a treaty contribution multiplied by the country-of-residence factor — for Estonia in 2026 only 0.3057, less than a third of the Dutch premium burden and thereby the lowest of all Vertrekklaar corridors. One deadline to know: for those leaving on an early retirement pension, this route is expected to close to new registrations from 1 November 2026.