Tax in Estonia

Tax In Estonia

A Contractor’s Guide to Taxes :

One of the most consistently challenging aspects of contracting in Estonia is complying with the country’s tax system. As well as paying tax in Estonia, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.

How do I calculate my taxable income:

If you’re working in Estonia under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Estonia for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Estonia, but contractors may not be offered this service because of their short stay with each employer.

Anybody who can’t pay their tax in Estonia through PAYE is left with the prospect doing everything themselves.

Do you know much about Estonian Tax Law? Does Estonia have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Estonia can range from 0 to 20 percent, and you need to be sure you are placed in the correct tax brackets.

Tax Calculator:

If you are a contractor and want a calculation on your tax and net retention in Estonia, we can supply it to you free of charge.

Using an Umbrella Company for Income Tax :

Contractors in Estonia are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. An Estonian umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).

The companies are experts in Estonian taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Estonian tax office or tax department directly including processing your tax refund if you are eligible.

How We Can Help You with Tax:

We work with numerous umbrella companies in Estonia, many of whom are experts in tax and immigration laws. If you have any questions about tax in Estonia, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Estonian work permit.

Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Estonia but without the overhead of directly dealing with the Estonian tax authorities. Get in touch with us today for some reliable advice on tax in Estonia!

When Do You Need to Lodge Your Tax Return?:
31 March (in the year following the income tax year)
Tax Filing Deadline :
31 March (in the year following the income tax year)
Can you file it online? :
Yes, https://www.emta.ee/
Currency:
Euro (EUR)
Tax-free Threshold in:
EUR2,160
Grossed Income:
0 – 2,160
Tax Rate:
0%
Grossed Income:
>2,160
Tax Rate:
20%
How long does it take to set up:
3.5 days
How much does it cost:
EUR145 – EUR190
Is it easy? :
Starting a Business Rank: 12/190 (Source: World Bank)
How to File Taxes in:

You are required to submit an income tax return if your annual income exceeds the tax exemption threshold, and you are required to pay additional income tax or you would like to claim any tax deductions.

Step 1: Review Pre-Filled Data

From 7 to 9 February, taxpayers can review pre-filled income tax returns, based on data which has been submitted to the Estonian Tax and Customs Board by employers.

In the case of any missing or incorrect data, you are required to contact your employer so the data to be amended.

Step 2: Declare Income

There are 3 ways to declare your income: (i) online, (ii) at a service bureau or (iii) by post.

(i) Online

Log in to e-Tax Board/e-Customs here(link is external) with your ID card, mobile ID, or via Internet bank.

Fill in the required fields in Estonian. Information on the status of the income tax return, appears on your personal income tax information page. If a tax declaration needs further verification, a notice will appear on the information page.

(ii) Service bureau

From 15 February, you may collect a pre-filled income tax return from your nearest service bureau, which can be found here(link is external).

Ensure the information is accurate and complete, making amendments as required. If you have received income that is not included on the pre-filled tax return, you must declare this income as well.

Alternatively, you may complete and a blank tax return form (available here(link is external)) or use a computer at the service bureau. A service bureau official is able to provide assistance, if required.

(iii) By post

Income tax returns can be delivered to the Estonian Tax and Customs Board by post. Addresses can be found here(link is external).

Notes:

Flat Rate: A flat rate of 20% is taxed on employment income for amounts above EUR2,160.

Deductions: Residents with an annual income of EUR14,400 or less, are entitled to a basic personal allowance of EUR6,000. Residents with an annual income above EUR14,400, are entitled to a deduction amounting to 6000 – 6000 / 10,800 x (amount of income – 14,4000).

Does the 183 day rule apply in:

Yes

When do you become a tax resident in:

You become a tax resident in Estonia when:

  • Your place of residence is in Estonia;
  • You stay in Estonia for at least 183 days over 12 consecutive calendar months; or
  • You are an Estonian state public servant in the foreign service.

A person is deemed to be a resident from the date of their arrival in Estonia.

Am I taxed on my global income in:

Residents are taxed on their worldwide income. Non-residents are taxed on their Estonia-source income only.