Tax administration

General information

The tax system in Estonia consists of state taxes provided for in and imposed by Acts concerning taxes and local taxes imposed by a rural municipality or city council in its administrative territory pursuant to law.

The following are the state taxes:

1) income tax;

2) social tax;

3) land tax;

4) gambling tax;

5) value added tax;

6) customs duty;

7) excise duties;

8) heavy goods vehicle tax.

Tax authorities

The tax authority for state taxes is the Tax and Customs Board LINK https://www.emta.ee/eng

Taxable persons

The following are taxable persons:

1) taxpayers;

2) withholding agents;

3) other persons responsible for the tax liability of a taxpayer or withholding agent pursuant to law or a contract.

Registration requirement (non-exhaustive list)

The following persons are required to register themselves in the Tax and Customs Board prior to the commencement of activities:

1) legal persons who are not to be entered in the commercial register, the non-profit associations and foundations register or the register of religious associations;

2) non-resident legal persons, sole proprietors, associations of persons or pools of assets which are commencing economic activities in Estonia through a permanent establishment which is not entered in the commercial register as a branch.

The following persons are required to register themselves in the Tax and Customs Board within 10 days as of the date on which the tax liability arises in Estonia:

1) non-resident employers, including sole proprietors, foreign missions, other foreign agencies, international organisations and their representatives if not earlier registered in the register of taxable persons;

2) partnerships, communities and other associations of persons not having the status of a legal person.

Liability of third party for tax liability of other person (non-exhaustive list)

A person who transfers an enterprise or a part thereof and the transferee are jointly liable for the payment of tax arrears pursuant to the provisions of the Law of Obligations Act.

If a legal representative, manager or administrator of assets violates the obligations specified in Taxation Act intentionally or due to gross negligence, the legal representative, manager or administrator of assets and the taxable person shall be jointly liable for the tax arrears incurred as a result thereof.

Tax examination

A tax authority has the right to examine any documents relating to the economic or professional activities of a taxable person or to the payment of taxes by a taxable person, and to take inventory or control measurements of goods, materials, other assets, work performed and services provided.

The examination is divided into:

1) the examination of individual cases;

2) general examination or tax audit.

General anti-avoidance rule

If it is evident from the content of a transaction or act that the transaction or act is performed for the purposes of tax evasion, conditions that correspond to the actual economic content of the transaction or act apply upon taxation.

Binding preliminary decision (advance ruling)

By an advance ruling, the Tax and Customs Board provides, on the application of a taxable person, a binding assessment of taxation of an act or set of acts to be performed in the future.

The procedure does not apply to determination of the value of transactions concluded between the associated persons (transfer pricing). A tax authority shall make an advance ruling within 60 calendar days as of the date of receipt of an application. A state fee of 1180 euros shall be paid for the review of an application for a binding preliminary decision.

Limitation period for making assessment of tax

The limitation period for making an assessment of tax is 3 years. In the event of intentional failure to pay or withhold a tax, the limitation period for making an assessment of tax is 5 years. A limitation period begins to run on the due date for the submission of the tax return which was not submitted or which contained information which caused the amount of tax to be calculated incorrectly.

Interest payable by taxable person and to taxable person

If a taxable person fails to pay tax by the due date or the tax authority has collected from a taxable person the amount of tax which exceeds the amount of tax due according to a law, the party at fault is required to calculate interest for the benefit of the other party at the rate of 0.06% per day.

Right to file challenge (extrajudicial)

If a taxable person finds that his rights have been violated by a tax notice or notice of assessment, the person has the right to demand the repeal or amendment of the administrative act.

A challenge against an administrative act shall be filed within 30 days as of the date of notification of or delivery of the administrative act.

Legal punishments for tax evasion and for hindrance of activities of tax authority

Failure to submit information to a tax authority or submission of false information or violation of the obligation to withhold which results in the amount of tax payable being less than the amount of tax to be paid pursuant to a law or the amount to be refunded, compensated for or set off being greater than the amount to be refunded, compensated for or set off pursuant to a law (tax evasion) is punishable by a fine of up to 300 fine units (1 fine unit = 4 euros). The same act, if committed by a legal person, is punishable by a fine of up to 32,000 euros.

Failure to submit a tax return, documents, things or other information by the due date, failure to register with a tax authority, submission of false information or knowing submission of incorrect documents to a tax authority, failure to comply with the requirements for the keeping of records, failure to comply with an order of a tax authority or obstruction of the activities of a tax authority in another manner is punishable by a fine of up to 300 fine units (1 fine unit = 4 euros).The same act, if committed by a legal person, is punishable by a fine of up to 3,200 euros.