If an individual resides
in Estonia for more than 183 days in any calendar
year, they are deemed resident for tax purposes.
Tax liability may also arise if a person is employed
by an Estonian company and paid directly by them,
regardless of the number of days of residency in
a year.
Residents of Estonia
pay income tax on income derived from within Estonia
and worldwide. Non-residents only pay tax on income
derived from within Estonia.
EU/EEA citizens may enter
Estonia freely to live and work. No work permit
is required. After three months, the person must
register their place of residency and apply for
a temporary residence permit. Non-EU/EEA citizens
may first require a visa to enter the country.
Cost
of Residence Document (approx)
Work
Permit Required
Work
Permit Authority
A fee of EEK1000 is payable with
the permit application.
EU/EEA citizens do not require a
work permit. Non-EU/EEA citizens will normally require
a work permit unless they are in the country on
a short-term employment arrangement. A work permit
is not required where a person has a long-term residence
permit.
The Citizenship and Migration Board
is the first point of contact with regard to work
permits.
Personal
Income Tax
Corporate
Income Tax
Social
Taxes
Personal income tax is levied at
a flat rate of 21%. Each individual receives an
annual personal allowance of EEK30,000 (2010). This
allowance is set to rise in 2011 and again in 2012.
The rate of corporation income tax
in Estonia is 21% on gross distributed profits.
The rate has gradually fallen from a high of 26%
in 2004, and was set to be reduced to 18% by 2012,
but the stepped reductions have been stayed by the
current state of the economy .
Employers pay Social Tax on payments
made in cash (or kind) to all employees. Employees
do not pay Social Tax – employers pay the
tax for them. Sole proprietors must pay the tax
themselves. The rate of social tax is 33%, apportioned
20% to social security and 13% to insurance.
Capital
Gains Tax
Property
or Wealth Tax
Stamp
Duty
There is no separate capital gains
tax as such in Estonia. Any taxable gains are taxed
as normal personal or corporate income, at 21%.
Property owners in Estonia are liable
to pay an annual municipal Land Tax based on the
market value of the land. The rate varies between
0.5% and 2.5%. Profits from the sale of most property
are taxed at 21% of the net proceeds.
Stamp Duty is only payable on some
contracts and is by way of a small, fixed fee. No
Stamp Duty exists for property transactions.
Other
Taxes
The standard rate of VAT is 20%.
Certain supplies attract a reduced rate of 9%, including
books, some periodicals and certain medicines and
medical equipment supplies. Income from property
rentals is subject to withholding tax of 21%, as
is interest income, under certain circumstances,
and royalty income in relation to individuals. A
lower rate 10% WHT is imposed on payments relating
to fees for services, and to entertainers and sportsmen.
There is withholding tax on royalties of 10% where
such payments relate to corporations (except to
connected EU corporate recipients, which are exempt).
I am facing a dilemma and would like to invite any reader to advise me.
I am a Brit who has lived outside UK since 1993- initially in Belgium (5 years) & subsequently in 4 African countries. After a year outside UK, the UK Inland Revenue confirmed my status as ‘non-resident’ for tax purposes and as I have had no income in UK, I have not completed a UK tax return for many years. I visit UK very rarely, normally for one or two weeks per year.
In May 2011, I was made redundent by my employers, who were downsizing. This coincided with a move to retire in the Netherlands, where I now have official residency (my wife is Dutch). I thought that, at 63 years of age, I would be unlikely to find suitable employment; in fact, I have not tried hard and had resigned myself to permanent (but slightly premature) retirement.
However, to my surprise, I have recently been approached (through a mutual acquaintance) by a company that wishes to use my skills on a project in the Isle of Man. The role, if & when confirmed, would see me working for about 10 days a month in Isle of Man, with about 5-7 additional days per month, working from home. Contract will be for about two years. The firm has asked me to confirm if I would prefer to be paid (and therefore be taxed) in Netherlands or Isle of Man, the idea being that I create a self-employment entity for this employment. I have no data on which to base a response. Given Isle of Man's traditional ‘low tax ‘environment, are there any benefits to declaring an income in IOM? Are there any Isle of Man residency implications? Netherlands takes a tax cut on total world wide income, and, as I have never had any contact with the Dutch authorities, I am reluctant to start such a relationship now. Do I have to declare income in both countries, with a breakdown prorata to the time spent in each jurisdiction? Should I declare income to UK Inland revenue?
If anyone has pertinent advice on these points, I’d be grateful to hear them.
Just wondering if anyone 'on the ground', as it were, might be reading and able to help me...I was considering relocating my hairdressing business from the UK to Ireland before the economy started to go properly belly-up...now, not so much.
Are things as bad as they seem over there, or is it being over-hyped by the media? And is the government still keen to support small business people? Cos if not, I'll look elsewhere...
Hi, I live in South Africa, and along with 2 business partners (one in South Africa and one in Ireland - all South African citizens though) are setting up a company that designs Smart phone applications. As they will be sold on the various platforms (none of which operate out of South Africa)we have to list our company as operating out of Ireland anyway. As such, we have decided to set up our company in the best tax country and are wanting info on whether Jersey or Malta is best? If anyone has some inside info we would really appreciate it!! Thanks!Mary
I am moving full time to France in Jan 2012 where I will be working as a freelance contract engineer to a number of Australian based companies. It is my choice to move to France not a work requirement. I will be renting my house out in Austrlalia and renting a house while I am in France. I hold both EU & Austrlain citizenshiip. I am married with 2 young children. Approx total family income $100k AUD. Do I pay tax in France or Australia or both ? Any help or guidance would be much appreciated.France move
Cyprus
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