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Income Tax Act 1
Passed 15 December 1999
(RT
2 I 1999, 101, 903; consolidated text RT I 2004, 59, 414),
entered into force 1 January 2000,
amended by the following Acts:
18.11.2004 entered into force 01.01.2005 – RT I 2004, 84, 568;
08.12.2004 entered into f orce 01.01.2005 – RT I 2004, 89, 604;
06.04.2005 entered into force 01.01.2006 – RT I 2005, 22, 148;
20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193;
20.06.2005 entered into force 01.01.2006 – RT I 2005, 36, 277;
28.09.05 entered into force 01.01.06 – RT I 2005, 54, 430;
12.10.05 entered into force 18.11.05 – RT I 2005, 57, 451;
26.01.06 entered into force 04.02.06 – RT I 2006, 7, 40;
26.01.06 entered into force 13.02.06 – RT I 2006, 7, 41;
10.05.06 entered into force 01.01.07 – RT I 2006, 26, 193;
31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208;
07.06.2006 entered into force 01.01.2007 – RT I 2006, 30, 232;
15.11.2006 entered into force 01.01.2007 – RT I 2006, 55, 406;
21.12.2006 entered into force 01.01.2007 – RT I 2006, 63, 468;

21.12.2006 entered into force 01.09.2007 – RT I 2007, 4, 19;
14.02.2007 entered into force 01.07.2007 – RT I 2007, 24, 126;
21.02.2007 entered into force 01.01.2008 – RT I 2007, 25, 130;
14.06.2007 entered into force 14.07.2007 – RT I 2007, 44, 316;
14.06.2007 entered into force 1.01.2008 – RT I 2007, 44, 318;
26.03.2008 entered into force 01.01.2009 – RT I 2008, 17, 119;
19.06.2008 entered into force 01.09.2008 – RT I 2008, 34, 208;
23.10.2008 entered into force 14.11.2008 – RT I 2008, 48, 269;
19.11.2008 entered into force 01.01.2009, partially 01.01.2010 – RT I 2008, 51, 283;
20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286;
04.12.2008 entered into force 01.01.2009 – RT I 2008, 58, 323;
04.12.2008 entered into force 01.01.2009 – RT I 2008, 58, 324;
17.12.2008 entered into force 01.01.2010 – RT I 2008, 58, 329;
11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331;
18.12.2008 entered into force 01.02.2009 – RT I 2009, 3, 15;
20.02.2009 entered into force 01.04.2009, partially 01.07.2009 a nd 01.01.2010 – RT I
2009, 15, 93;
26.02.2009 entered into force 28.03.2009, partially 01.07.2009 – RT I 2009, 18, 109;
22.04.2009 entered into force 01.06.2009 – RT I 2009, 24, 146;

29.10.2009 entered into force 01.01.2010, partially 01.12.2009 (amendments apply
retroactively as of 01.08.2009) – RT I 2009, 54, 362;
26.11.2009 entered into force 01.01.2010 – RT I 2009, 59, 391;
18.11.2009 entered into force 01.07.2010 – RT I 2009, 60, 395;
26.11.2009 entered into force 01.01.2010 – RT I 2009, 62, 405;
16.12.2009 entered into force on the date when the authority of the XII membership of
the Riigikogu
3 commences – RT I 2010, 1, 2;
22.04.10 enters into force on the date which has been determined in the decision of the
Council of the European Union regarding abrogation of a derogation established in
respect of the Republic of Estonia on the basis provided for in Article 140 (2) of the
Treaty on the Functioning of the European Union – RT I 2010, 22, 108.

Chapter 1
General Provisions

§ 1. Object of taxation
(1 ) Income tax is imposed on the income of a taxpayer from which the deductions
allowed pursuant to law have been made.
(2) Income tax prescribed in § 48 is imposed on fringe benefits granted to a natural
person.
(3) Income tax prescribed i n §§ 49-52 is imposed on gifts, donations and costs of
entertaining guests, distributed profit, and expenses and payments not related to business,
made by a resident legal person and a profit -making state agency. Income tax prescribed
in § 50 is imposed on an amount transferred into the state budget out of the net profit of a
profit -making state agency.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)

(4) Income tax prescribed in § 53 is imposed on fringe benefits granted by a non –
resi dent and on gifts, donations and costs of entertaining guests, profit distributions, and
expenses and payments not related to business, made by a non- resident through a
permanent establishment.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)

§ 2. Taxpayer
(1) Income tax specified in subsection 1 (1) is paid by natural persons and non-
resident legal persons who derive taxable income.
(2) Income tax specified in subsection 1 (2) is paid by employers who are natural
persons and b y resident legal persons, non- residents having a permanent establishment or
operating as employers in Estonia, and Estonian state and local government authorities
who grant taxable fringe benefits.
(3) Income tax specified in subsection 1 (3) is paid by resident legal persons and
profit -making state agencies.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(4) Income tax specified in subsection 1 (4) is paid by non -resident legal persons
which have a registered permanent establi shment (§ 7) in Estonia.

§ 3. Period of taxation
(1) The period of taxation for income tax specified in subsection 1 (1) is one calendar
year.
(2) The period of taxation for income tax specified in subsections 1 (2) -(4) is one
calendar month.

§ 4. Tax rates
(1) Except in the cases specified in subsections 4 (2) and 43 (4), the rate of income
tax is 21 per cent.
(1
1) In the case of the object of taxation specified in subsections 1 (2) -(4), the taxable
amount, before it is multiplied by the tax rate, shall be divided by 0.79.
(26.11.2009 entered into force 01.01.2010 – RT I 2009, 59, 391)
(2) The rate of income tax for income specified in subsections 21 (2) and (3) is 10 per
cent.
(20.05.2004 entered into force 27.05.2004 – R T I 2004, 45, 319)(3) (Repealed –
17.12.2003 entered into force 01.01.2005 – RT I 2003, 88, 587)

§ 5. Receipt of tax
(1) Income tax paid by resident natural persons is received as follows:
1) without taking into account the deducti ons provided for in Chapter 4, 11.4 per
cent of the taxable income of a resident natural person is received by the local
government of the taxpayer’s residence;
(20.02.2009 entered into force 01.04.2009 – RT I 2009, 15, 93)
2) that part of the inco me tax which exceeds the amount specified in clause 1), and
income tax paid on pensions and gains derived from the transfer of property are received
by the state.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(1
1) Income tax paid by a non-resident is received by the state.

(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(2) The place of residence of a resident natural person as indicated on 1 January of a
calendar year in the register of taxable persons maintained by the Tax and Customs Board
is deemed to be his or her place of residence throughout the same calendar year. If the
Tax and Customs Board does not have information concerning the place of residence of a
resident natural person, the income tax paid by th e person shall be divided between the
local governments in proportion to their rated percentage according to the principle
specified in subsection (1). Income tax shall be transferred to local governments and their
rated percentages shall be calculated pur suant to the procedure established by a regulation
of the Minister of Finance.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591)
(3) Income tax specified in subsections 1 (2) -(4) is received by the state.

Chapter 2
Definitions Used in Act

§ 6. Resident
(1) A natural person is a resident if his or her place of residence is in Estonia or if he
or she stays in Estonia for at least 183 days over the course of a period of 12 consecutive
calendar months. A person shall be deemed to be a resident as of the date of his or her
arrival in Estonia. Estonian state public servants who are in foreign service are also
residents. A resident natural person shall pay income tax on all income derived by him or
her in Estonia and outside Estonia, regardless of whether the income is listed in §§ 13- 22
or not.

(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(2) A legal person is a resident if it is established pursuan t to Estonian law. European
public limited companies (SE) and European associations (SCE) whose seat is registered
in Estonia are also residents. A resident legal person shall pay income tax on the objects
of taxation prescribed in §§ 48- 52 and withhold income tax from payments listed in § 41.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(3) A non- resident is a natural or legal person not specified in subsections (1) or (2).
A non- resident shall pay income tax pursuant to the provisions of § 29 only on income
derived from Estonian sources. Unless otherwise prescribed in this Act, the income of a
non- resident legal person shall be declared and income tax shall be imposed, withheld
and paid pursuant to the same conditions and procedure as in the case of a non -resident
natural person.
(3
1) The income of foreign associations of persons or pools of assets without the status
of a legal person is subject to taxation as the income of the shareholders or members of
such association or pool in proportion to the sizes of their holdings. If the members or
shareholders of an association or pool of assets are unknown or their residency is not
proved, the income is attributed to the person who administers the assets of the
association or the pool of assets or who concludes transactions in the name thereof.
Income tax shall be withheld from payments made to such associations or pools of assets
according to the provisions of law applicable to non- resident legal persons. If such
association or pool of a ssets is located in a low tax rate territory (§ 10), income tax shall
be withheld according to the provisions of law applicable to legal persons located in low
tax rate territories.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(4) The income of branches of foreign companies entered in the Estonian commercial
register and the income of other permanent establishments (§ 7) of non- resident legal
persons registered with a regional structural unit of the Tax and Customs Board is subject

to taxation pursuant to § 53. The provisions of subsection (3) of this section do not apply
to taxation of income derived by such non-residents through their permanent
establishments.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(5) If the residency prescribed on the basis of an international agreement differs from
the residency prescribed pursuant to law or if the international agreement prescribes more
favourable conditions for taxation of income than those provided by law, the provisions
of the international agreement apply.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

§ 7. Permanent estab lishment
(1) “permanent establishment” means the place through which the permanent
economic activity of a non- resident is fully or partially carried out in Estonia.
1) a branch;
2) a centre of management, or an office, factory or work shop;
3) a building site, a place of construction, or an installation or assembly project;
4) a place where the examination or extraction of natural resources is carried out, as
well as any supervisory activities related thereto;
5) a place for the provision of services (including management and consultation
services).

(2) If a representative of a non -resident operates in Estonia and is authorised to carry
out and repeatedly carries out transactions in the name of the non- resident, such non-
resident is deemed to have a permanent establishment in Estonia with respect to the
transactions carried out in Estonia by the representative in the name of the non- resident.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(3 ) When a non- resident carries on business in Estonia through a permanent
establishment situated in Estonia, the income which the permanent establishment might
be expected to derive if it were a distinct and separate taxpayer engaged in the same or
si milar activities under the same or similar conditions and dealing wholly independently
of the non- resident of which it is a permanent establishment shall be attributed to the
permanent establishment.

§ 8. Associated persons
Persons are deemed to be associated if:
1) one person is the spouse, direct blood relative, sister or brother, descendant of a
sister or brother, direct blood relative of the spouse, or a sister or brother of the spouse of
the other person;
2) the persons are companies belonging to one group as defined in § 6 of the
Commercial Code (RT I 1995, 26/28, 355; 1998, 91/93, 1500; 1999, 10, 155; 23, 355; 24,
360; 57, 596; 102, 907; 2000, 29, 172; 49, 303; 55, 365; 57, 373; 2001, 24, 133; 34, 185;
56, 332; 336; 89, 532; 93, 565; 2002, 3, 6; 35, 214; 53, 336; 61, 375; 63, 387; 388; 96,
564; 102, 600; 110, 657; 2003, 4, 19; 13, 64; 18, 100; 78, 523; 88, 591);
3) one person owns more than 10 per cent of the share capital, total number of votes
or rights to the profits of a l egal person;

4) one person, together with other persons with whom the person is associated ,
owns more than 50 per cent of the share capital, total number of votes or rights to the
profits of a legal person;
5) more than 50 per cent of the share capital, total number of votes or rights to the
profits of legal persons belong to one and the same person;
6) the persons own more than 25 per cent of the share capital, total number of votes
or rights to the profits of one and the same lega l person;
7) all members of the management board or the bodies substituting for the
management boards of legal persons are the same persons;
8) a person is an employee of another person, the employee’s spouse or a direct
blood relative;
9) a person is a member of the management or controlling body of a legal person (§
9), or the spouse or a direct blood relative of a member of the management or controlling
body.

§ 9. Management or controlling body of legal person
(1) A manage ment or controlling body of a legal person is any authorised body or
person who, pursuant to an Act governing the legal person, a partnership agreement, the
articles of association or any other legislation regulating the activities of the legal person,
has the right to participate in managing the activities of the legal person or in controlling
the activities of the management body of the legal person.
(2) Management or controlling bodies include management boards, supervisory
boards, partners authori sed to represent general or limited partnerships, procurators,
founders until registration of the legal person, liquidators, trustees in bankruptcy,
auditors, controllers and internal audit committees. Directors of branches of foreign

companies and managers of permanent establishments (§ 7) registered at regional
structural units of the Tax and Customs Board are also deemed to be management bodies.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(3) The provisions of paragraphs (1) and (2) apply to both legal persons in private and
public law and to resident and non- resident legal persons.

§ 10. Low tax rate te rritory
(1) A low tax rate territory is a foreign state or a territory with an independent tax
jurisdiction in a foreign state, which does not impose a tax on the profits earned or
distributed by a legal person or where such tax is less than one -thir d of the income tax
which a natural person who is an Estonian resident would, pursuant to this Act, have to
pay on a similar amount of business income, without taking into account the deductions
allowed under Chapter 4. If taxes imposed on the income earne d or distributed by
different types of legal persons differ, a territory is deemed to be a low tax rate territory
only with regard to legal persons in the case of whom the tax meets the conditions for
low tax rate territories specified in the first sentenc e of this subsection.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377; 31.05.2006 entered into
force 01.01.2007 – RT I 2006, 28, 208)
(2) A legal person is not deemed to be located in a low tax rate territory if more than
50 per cent o f its annual income is derived from:
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
1) manufacturing of goods, trade in goods, and provision of transport,
communications, accommodation and tourism services in the home country of the legal

person, or provision of insurance services by a legal person holding an insurance
activities licence;
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
2) chartering of freighting vessels.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(3) Without prejudice to the provisions of subsections (1) and (2), the Government of
the Republic shall establish a list of territories which are not regarded as low tax rate
territories.

§ 11. List of non- profit associations and foundations benefiting from income tax
incentives
(1) The list of non- profit associations and foundations benefiting from income tax
incentives (hereinafter list) shall be approved by the Government of the Republic after
obtaining a recomm endation from a committee of experts.
(2) A non- profit association or foundation (hereinafter association) which meets the
following requirements shall be entered in the list:
1) the association operates in the public interest;
2) it is a charitable association, that is, an association offering goods or services
primarily free of charge or in another non- profit seeking manner to a target group which,
arising from its articles of association, the association supports, or makes support
payments to the persons belonging in the target group;
3) the association does not distribute its assets or income, grant material assistance
or monetarily appraisable benefits to its founders, members, members of the management
or controlling body (§ 9), persons who have made a donation to it or to the members of

the management or controlling body of such person or to the persons associated with such
persons within the meaning of clause 8 (1);
4) upon dissolution of the association, the asse ts remaining after satisfaction of the
claims of the creditors shall be transferred to an association or legal person in public law
entered in the list;
5) the administrative expenses of the association correspond to the character of its
activity a nd the objectives set out in its articles of association;
6) the remuneration paid to the employees and members of the management or
control body of the association does not exceed the amount of remuneration normally
paid for similar work in the business sector.
(3) The requirement specified in clause (2) 3) does not apply to an association
engaged in social welfare, or to a case where the associated person belongs to the target
group supported by the association and does not receive additional benefits as compared
with other persons in the target group.
(4) An association shall not be entered in the list if:
1) it is not operating in accordance with its articles of association;
2) if the documents submitted for entry in the list do not conform to the
requirements established by legislation;
3) it is engaged in business as its principal activity or uses business income for
purposes other than those specified in its articles of association; The principal activity of
an association is deemed to be business if over a half of the income of the association is
received from business, unless at least 90 per cent of the business income minus the
expenditure related to business are used in the public interest;
4) it is engaged in advertising the goods or services of a founder or donor, or
promotion of the professional activity or business of a person in the target group;

5) it has tax arrears for which no payment schedule has been arranged;
6) it has r epeatedly failed to submit, by the term or pursuant to the procedure
prescribed by legislation, a report or tax return to a tax authority, or it has repeatedly
delayed payment of tax;
7) it is being terminated or bankruptcy proceedings have been br ought against it;
8) it is a professional organisation, organisation for business support, trade union or
political association. An association is deemed to be a political association if it is a
political party or election coalition or if the main objective of the association or the
principal activity of the political party or election coalition is organising campaigns or
collecting donations for or against a person running for an elected or appointed office of a
political party or election coalitio n, or an office for the performance of public duties.
(5) The requirement specified in clause (4) 4) does not apply if the association
provides, based on a contract, advertising services at the market price.
(6) The following is not deemed to be business within the meaning of this section:
1) activities directly related to the objectives set out by the articles of association
(for example publication of printed matter, training, information exchange, organisation
of events);
2) activities for the sale of donated capital;
3) organisation for lotteries and auctions for charitable purposes, and other such
activities for collecting donations unless such activity is the principal activity of the
association;
4) receivi ng financial income which results from the principal activity.
(7) The Government of the Republic has the right to delete an association from the
list if:

1) the activity of the association does not meet the requirements set forth in
subsecti on (2), or
2) the circumstances specified in subsection (4) become evident, or
3) the association has failed to notify a regional structural unit of the Tax and
Customs Board of amendment of its articles of association within thirty days af ter the
date of entry of the amendment in the register of non- profit associations and foundations,
or
4) the association has submitted a written application for deletion of the association
from the list.
(8) The Government of the Republic sha ll establish, by a regulation, the procedure for
compiling the list, a list of documents to be submitted for such purpose, the procedure for
entry in and deletion from the list of associations, the procedure for formation of the
expert committee, its rules of procedure, and the procedure for appointment and removal
of the members of the committee.
(9) An application for entry of in the list shall be submitted to a regional structural
unit of the Tax and Customs Board by 1 February or 1 August. After obtaining the
recommendations of the expert committee, the regional structural unit of the Tax and
Customs Board shall inform the association by 15 March or 15 September
correspondingly of an initial decision to deny entry in the list or to delete the assoc iation
from the list. Based on the proposal of the Minister if Finance, the Government of the
Republic shall enter an association in the list or delete an association from the list as of 1
July or 1 January by an order.
(10) A legal person entered in the register of religious associations pursuant to the
Churches and Congregations is deemed to be a non- profit association benefiting from
income tax incentives without being included in the list.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

Chapter 3
Taxation of Income of Resident Natural Persons

§ 12. Income of resident natural person
(1) Income tax is charged on income derived by a resident natural person during a
period of taxation from all sources of income in Estonia and outsi de Estonia, including:
1) income from employment (§ 13);
2) business income (§ 14);
3) gains from transfer of property (§ 15);
4) rent and royalties (§ 16);
5) interest (§ 17);
6) dividends (§ 18);
7) maintenance support, pensions, scholarships, grants, benefits, awards, lottery
prizes (§19);
8) insurance indemnities and payments from pension funds (§§ 20, 20
1 and 21);
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)
9) income of a legal person located in a low tax rate territory (§ 22).
(2) The taxable income of a natural person does not include fringe benefits, gifts and
donations, dividends or other profit distributions subject to taxation pursuant to §§ 48- 53.

(3) Any compensation for certified expenses incurred for the benefit of another
person and any compensation for proprietary damage ordered by a court shall not be
deemed to be taxable income of a natural person. The provisions of this subsection do not
apply to compensation which is paid subject to separate terms, conditions and limits.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 13. Income from employment
(1) Income tax is charged on all emoluments paid to an employee or public servant,
including wages and salaries, additional remuneration, additional payments, holiday pay,
holiday benefit paid on the basis of § 46 of the Public Service Act, compensation prescribed
upon cancellation of the employment contract or upon relea se from service, compensation or
fines for delay ordered by a court or a labour dispute committee, sickness benefit and holiday
pay compensated from the state budget. Income tax shall be charged on compensation
paid in connection with an accident at work or an occupational disease, unless such
compensation is paid as insurance indemnity. For the purposes of this Act, servants
specified in subsections 12 (2) and (3) of the Public Service Act are also public servants.
(20.02.2009 entered into force 01.07.2009 – RT I 2009, 15, 93)
(1
1) Income tax shall be charged on remuneration or service fees paid on the basis of a
contract for services, authorisation agreement or any other contract under the law of
obligations.
(06.04.2005 entered into force 01.01.2006 – RT I 2005, 22, 148)
(2) Income tax is charged on all emoluments paid by a legal person to a member of a
management or controlling body (§ 9) for the performance of his or her official duties .
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)

(3) Income tax is not charged on:
1) compensation for official travel, accommodation and other expenses, daily
allowances during assignments abroad and remuneration for business travel abroad paid
to a public servant, an employee o r a member of the management or controlling body of a
legal person by the employer or a third person in the name of the employer, compensation
for such expenses paid for a family member of a public servant, and compensation for
relocation expenses arising from appointment to a position located in another area. The
tax exempt limit of compensation for accommodation costs is 77 euro per one twenty –
four hour period in the case of domestic assignments and 128 euro per one twenty -four
hour period in the case of assignments abroad, and the tax exempt limit of daily
allowances during assignments abroad is 32 euro. The procedure for the payment of
compensation for the expenses and daily allowances during assignments abroad specified
in the first sentence of this cla use shall be established by a regulation of the Government
of the Republic;
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
2) compensation for service or employment related use of a personal automobile
paid to a public servant, e mployee, or member of the management or controlling body of
a legal person. A personal automobile is deemed to be an automobile in the possession of
a person specified in the first sentence which is not in the ownership or possession of the
employer. If driving records are kept, the tax exempt limit of compensation paid to a
person is 0.30 euro per kilometre, but not more than 256 euro during each calendar month
per each employer paying the compensation, and if no records are kept, the tax exempt
limit of c ompensation paid to a person is 64 euro during each calendar month for all
employers paying the compensation. The procedure for keeping driving records and for
the payment of compensation shall be established by a regulation of the Government of
the Republ ic;
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
2
1) the compensation paid to a handicapped person specified in clause 2) for the use
of a personal motor vehicle for transport between his or her residence and place of
employment if it is impossible to make the journey using public transport or if the use of
public transport would cause a material decrease of the person’s ability to move or work.

In total, the costs provided for in this clause and clause 2) may be compensated for
exempt from tax within the limits provided for in clause 2). The compensation shall be
paid and driving records shall be kept pursuant to the procedure specified in clause 2).
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)
3) paymen ts made to a member of the Riigikogu to compensate for the expenses
related to work and official travel and housing expenses and costs related to the provision
of residential space to a member of the Riigikogu pursuant to the Members of the
Riigikogu Statu s Act;
(14.06.2007 entered into force 14.07.2007 – RT I 2007, 44, 316)
4) payments made for compensation of representation expenses and other expenses
to the President of the Republic and his or her spouse, and to the President and his or her
spous e after the termination of the President’s authority, on the basis of the President of
the Republic Official Benefits Act.
(26.01.06 entered into force 13.02.06 – RT I 2006, 7, 41)
4
1) payments made to members of the Government of the Republic pursua nt to § 31 1
of the Government of the Republic Act;
(16.12.2009 entered into force on the date when the authority of the XII membership of
the Riigikogu commences – RT I 2010, 1, 2)
5) (Repealed – 17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
6) the cost of meals given free of charge to members of the crews of ships during
voyages and to members of the crews of civil aircraft during flights, which does not exceed
6 euro per day per person;
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)

7) childbirth allowances paid to an employee or public servant, in an amount not
exceeding 5/12 of the basic exemption (§ 23) granted to a resident natural person during a
period of taxation;
(31.05.06 entered into for ce 01.01.07 – RT I 2006, 28, 208)
8) medical devices which are granted by an employer to an employed person whose
loss of capacity for work has been established to be 40 per cent and more (in the case of
an auditory disability, decrease of auditory ability of 30 decibels and more) and the value
of which does not exceed 50 per cent of the total size of payments subject to social tax
made to the employee or public servant during one calendar year;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
9) in -service training and re- training of employees paid for by the employer upon
termination of the employment or service relationship due to redundancy;
10) expenses incurred by an employer for the treatment of damage caused to the
he alth of an employee or public servant as a result of an accident at work or an
occupational disease;
11) payments made to diplomats based on subsection 62 (1) of the Foreign Service
Act;
(10.05.06 entered into force 01.01.07 – RT I 2006, 26, 193)
12) compensation for the cost of a uniform, paid on the basis of § 160 of the Defence
Forces Service Act;
(26.11.2009 entered into force 01.01.2010 – RT I 2009, 62, 405)
13) the cost of meals given free of charge to contract servicemen during out door
exercises, during international military operations, on board aircraft of the Air Force and
upon service on board ships of the Navy.

(21.12.2006 entered into force 01.01.2007 – RT I 2006, 63, 468)
14) monetary payments made to persons who have been recruited for secret co –
operation pursuant to § 14 of the Surveillance Act.
(26.11.2009 entered into force 01.01.2010 – RT I 2009, 62, 405)
(4) If a person receives income specified in subsections (1), (1
1) and (2) for working
in a foreign state, income tax is not charged on such income in Estonia if all the following
conditions are met:
1) the person has stayed in the foreign state for the purpose of employment for at
least 183 days over the course of a period of 12 consecutive calendar months;
2) the specified income has been the taxable income of the person in the foreign
state and if this is certified and the amount of income tax is indicated on the certificate
(even if the amount is zero).
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 14. Business income
(1) Income tax is charged on income derived from business (business income),
regardless of the time of its receipt.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(2) Business is a person’s independent economic or professional activity (including
the professional activity of a notary, a bailiff or, in the case specified in subsection 9 (3)
of the Sworn Translators Act (RT I 2001, 16, 70; 2002, 61, 375; 102, 600; 2003, 18, 100;
2004, 14, 91; 30, 208), a sworn translator and the creative activity of a creative person),
the aim of which is to derive income from the production, sale or intermediation of

goods, the provision of services, or other activities, including creative or scientific
activity.
(18.11.2004 entered into force 01.01.2005 – RT I 2004, 84, 568)
(3) Transfer of securities owned by a natural person does not constitute business.
(4) Types of income specified in § 16 may also be included in business income .
(5) Sole proprietors entered in the commercial register may make the deductions
allowed under Chapter 6 from their business income. Expenses incurred before
registration of a sole proprietor may be deducted from business income if they are related
to the registration of the sole proprietor or obtaining of activity licences and registrations
necessary for commencement of business activities. A certificate concerning the absence
of tax arrears shall not be issued if, on the date of submission of an appl ication, a taxable
person has failed to perform the obligation to submit a tax return and the tax authority has
not specified the amount of tax either.
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(5
1) (Repealed -31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
(5
2) (Repealed -31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
(5
3) Deductions relating to enterprise shall be made from the business income of the
period of taxation of a sole proprietor and the received amount shall be divided by 1.33
before it is multiplied by the tax rate.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(5
4) If the amount received by multiplying the amount calculated pursuant to
subsection (5
3) and the factor 0.33 is less than the amount of social tax calculated
pursuant to subsections 2 (5), (6) and (8) of the Social Tax Act, then such amount shall
not be divided in the manner specified in subsection (5
3) and income tax shall be

calculated from business income after deductions relating to enterprise which has been
reduced by the social tax calculated pursuant to subsections 2 (5), (6) and (8) of the
Social Tax Act. If the amount of social tax to be paid is higher than business income after
deductions r elating to enterprise, the amount of tax shall not be carried forward to
subsequent periods of taxation.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(5
5) If the amount received by multiplying the amount calculated pursuant to
subsectio n (5
3) and the factor 0.33 is more than the amount of social tax calculated
pursuant to clause 2 (1) 5) of the Social Tax Act, then such amount shall not be divided in
the manner specified in subsection (5
3) and income tax shall be calculated from business
income from which deductions relating to enterprise have been made and which has been
reduced by the social tax calculated pursuant to clause 2 (1) 5) of the Social Tax Act.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(6) The provisi ons of this Act concerning sole proprietors entered in the commercial
register also apply to notaries and bailiffs and to sworn translators, except in the case
specified in subsection 9 (4) of the Sworn Translators Act.
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(7) If the value of a transaction conducted between a person associated with the sole
proprietor in the course of business differs from the value of similar transactions
conducted between non- associated persons, the tax ad ministrator may, when determining
income tax, use the values of transactions applied by non- associated independent persons
under similar conditions.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 31.05.2006 entered into
force 01.01.2007 – RT I 2006, 28, 208)
(8) In the case specified in subsection (7), taxable business income shall be increased
or expenses to be deducted from business income shall be reduced. The methods for

determining the value of transactions shall be established by a regulation of the Minister
of Finance.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 15. Gains from transfer of property
(1) Income tax is charged on gains (§ 37) from the sale or exchange of any
transferable and monetarily appraisable objects, including real or movable property,
securities, registered shares, contributions made to a general or limited partnership or an
association, units of investment funds, rights of claim, rights of pre -emption, rights of
superficies, usuf ructs, personal rights of use, rights of commercial lessees, redemption
obligations, mortgages, commercial pledges, registered securities over movables, or other
restricted real rights, or the ranking thereof, or other proprietary rights (hereinafter
prope rty).
(2) In the case of a reduction in the share capital of a public limited company, private
limited company or association or in the contributions of a general or limited partnership,
and in the case of redemption or return of shares or contributi ons or in other cases,
income tax is charged on the portion of the payments received from own capital which
exceeds the acquisition cost of the holding (shares, contributions), unless the portion of
the specified payments or the share of profit which is the basis of the proceeds is subject
to income tax, taking account of the provisions of the second sentence of subsection 50
(2
1).
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(3) Income tax is charged on the amount in which the liquidation proceeds received
by a person upon the liquidation of a legal person exceed the acquisition cost of the
holding, unless the portion of the liquidation proceeds or the share of profit which is the

basis of the proceeds is subject to income tax, taking account of the provisions of the
second sentence of subsection 50 (2
1).
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(4) Income tax is not charged on:
1) accepted succession;
2) property returned in the course of ownership reform ;
3) expropriation payments and compensation paid upon expropriation, and gains from
the transfer of immovable property to the state or a local government without expropriation
proceedings for the purposes provided for in subsection 3 (1) of the Immovables
Expropriation Act if, prior to the transfer transaction, the requirements provided for in
subsection 3 (4) of the Immovables Expropriation Act are complied with;
(26.02.2009 entered into force 28.03.2009 – RT I 2009, 18, 109)
4) income from the transfer of movable property in personal use ;
5) income from the transfer of land returned in the course of ownership reform;
6) income derived by a person holding a public capital bond from the sale of
privatisation vouchers issued to him or her on the basis of the public capital bond;
7) income derived by an entitled subject of the agricultural reform from the sale of
the employment share issued in his or her name;
8) income derived by a person who is an entitled subject of the ownership reform from
the sale of privatisation vouchers issued to him or her on the basis of an unlawfully
expropriated property compensation order ;
8
1) compensation paid for unlawfully expropriated property, and compensa tion for
privatisation vouchers issued to but not used by an entitled subject of ownership reform.

(26.01.06 entered into force 04.02.06 – RT I 2006, 7, 40)
9) income from the exchange of a holding (shares, contributions) in the course of a
merger, division or transformation of companies or non- profit co-operatives;
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
10) income from the increase or acquisition of a holding (shares, contributions) in a
company by way of a non -moneta ry contribution;
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
11) income from the exchange of units of an investment fund of a Member State of
the European Union pursuant to the procedure provided for in §§ 153 and 154 of the
Inves tment Funds Act (RT I 2004, 36, 251).
(14.04.2004 entered into force 01.05.2004 – RT I 2004, 36, 251)
(5) Gains from the transfer of immovable property, a structure or apartment as a movable
or contributions to a housing association are not subject t o income tax if:
1) an essential part of the immovable or the object of apartment ownership or a right
of superficies is a dwelling which was used by the taxpayer as his or her permanent or
primary place of residence until transfer, or
2) a n essential part of the immovable or the object of apartment ownership or a right
of superficies is a dwelling, and the immovable has been transferred to the taxpayer’s
ownership through restitution of unlawfully expropriated property, or
3) an ess ential part of the immovable or the object of apartment ownership or a right
of superficies is a dwelling and such dwelling and the land adjacent thereto has been
transferred to the taxpayer’s ownership through privatisation with the right of pre –
emption a nd the size of the registered immovable property does not exceed 2 hectares, or

4) the summer cottage or garden house has been in the taxpayer’s ownership as a
movable or an essential part of an immovable for more than two years and the size of the
registered immovable does not exceed 0.25 hectares, or
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
5) the structure or apartment as a movable was used by the taxpayer as his or her
permanent or primary place of residence until transfer, or if the structure or apartment as
a movable has been transferred to the taxpayer’s ownership through restitution of
unlawfully expropriated property or through privatisation with the right of pre -emption,
or
6) the summer cottage or gar den house is a structure regarded as a movable and has
been in the taxpayer’s ownership for more than two years, or
7) an apartment in a building belonging to the housing association was used by the
taxpayer as his or her permanent or primary place of residence while he or she was a
member of the housing association.
(6) If the tax exemption specified in subsection (5) is based on the use of the dwelling
as the taxpayer’s residence and the immovable, building or apartment was also used for
other purposes, the tax exemption is applied according to the proportion of the area of the
rooms used as residence and the area of the rooms used for other purposes.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 16. Income from rent and royalties
(1) Income tax is charged on income the hire or lease of immovable or movable
property or parts thereof, and consideration for constitution of right of superficies or
encumbrance of immovable property with right of pre -emption, usufruct, personal right
of use or servitude. (31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

(2) Income tax is charged on consideration for the right to use a copyright of a
literary, artistic or scientific work (including cinematographic films or videos, recordings
of radio or television programmes or computer programs), and for the right to use a
patent, trade mark, industrial design or utility model, plan, secret formula or process, or
consideration for transfer of the right to use the above (her einafter royalties).
(3) Income tax is charged on consideration for the right to use industrial, commercial
or scientific equipment or information concerning industrial, commercial or scientific
experience (know -how), or on consideration for transfer of the right to use the above
(hereinafter royalties).

§ 17. Interest receivable
(1) Income tax is charged on all interest accrued from loans, securities, leases or other
debt obligations, including the amounts calculated on the basis of the debt obligations by
which the initial debt obligations are increased. The amounts payable in the event of
delay of the payment or other non- performance of the obligation are not deemed to be
interests.
(20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
(2) Income tax is not charged on interest paid to natural persons by a credit institution
which is a resident of a state which is a Contracting Party to the EEA Agreement
(hereinafter Contracting State) or on interest paid through or on account of a permanent
establishment of a non- resident credit institution located within a Contracting State.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

§ 18. Dividends receivable

(1) Income tax is charged on all dividends and other profit distributions received by a
resident natural person from a foreign legal person in monetary or non- monetary form.
(1
1) Income tax shall not be charged on dividends if income tax has been paid on the
share of profit on the basis of which the dividends are paid or if income tax on the
dividends has been withheld in a foreign state.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(2) A dividend is a payment which is made from the net profit or the retained profits from
previous year s pursuant to a resolution of a competent body of a legal person, and the basis
for which is the recipient’s holding in the legal person (ownership of shares, partnership
in a general or limited partnership or membership in a commercial association, or other
forms of holding pursuant to the legislation of the home country of the company).
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
(3) Payments made upon a reduction in share capital or contributions, redemption of
shares or liquida tion of a legal person are taxed pursuant to the provisions of subsections
15 (2) and (3).
(4) If a resident natural person is a shareholder or member in an association of
persons or a co- owner of a pool of assets which does not have the status of a legal person,
income tax is charged on the net profit of the association or pool of assets in proportion to
the holding or voting rights of the taxpayer.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
(5) The provisions of subsection (4) do not apply to any holding in a pool of assets
concerning which a security, as defined in § 2 of the Securities Market Act (RT I 2001,
89, 532; 2002, 23, 131; 63, 387; 102, 600; 105, 612; 2003, 81, 544; 88, 591; 2004, 36,
251; 37, 255), has been issued.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 19. Maintenance support, pensions, scholarships and grants, benefits, awards, gambling
prizes, compensation
(22.04.2009 entered into force 01.06.2009 – RT I 2009, 24, 146)
(1) Income tax is charged on maintenance support which a natural person receives on
the basis of a court decision or a notarially authenticated or notarially certified agreement,
pursuant to the Family Act.
(18.11.2009 entered into force 01.07.2010 – RT I 2009, 60, 395)
(2) Income tax is charged on all pensions, benefits, scholarships and grants, cultural,
sports and scientific awards, lottery prizes, benefits received on the basis of the Parental
Benefit Act and compensation and daily allowances related t o sports assignments and
paid by an artistic association to creative persons for business trips relating to the creative
activity of the creative persons.
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)
(3) Income tax is not charged o n:
1) (Repealed – 17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
2) (Repealed – 12.09.2001 entered into force 01.01.2002 – RT I 2001, 79, 480)
3) scholarships and grants paid pursuant to law or from the state budget, and benefits
paid pursuant to law, except for scholarships, grants and benefits which are paid in
connection with business or an employment or service relationship or with membership
of the management or controlling body of a legal person;
(24.10.2001 ent ered into force 01.01.2002 – RT I 2001, 91, 544)
4) international and s tate cultural and scientific awards and sports awards granted by the
Government of the Republic ;

5) scholarships and grants not specified in clause 3) which are granted for study or
research or for artistic or sports activities and which meet the conditions established by the
Government of the Republic ;
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
6) gifts and donations received from a natural person, a state or local government
authority or a resident legal person, or from a non -resident through or on account of its
permanent establishment registered in Estonia;
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
7) winning s from gambling organised on the basis of an activity licence for the
organisation of gambling or a corresponding registration;
(22.04.2009 entered into force 01.06.2009 – RT I 2009, 24, 146)
8) benefits paid to victims of crime pursuant to law;
(1 7.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
9) conscripts’ allowances paid pursuant to law and non- monetary benefits granted in
connection with business pursuant to law;
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544; 28.09.2005 entered into
force 01.01.2006 – RT I 2005, 54, 430)
10) compensation for travel and accommodation costs and daily allowances during
assignments abroad which are related to sports assignments and paid to persons specified
in § 7 of the Sport Act, and which are paid by an artistic association to creative persons
for business trips relating to the creative activity of the creative persons within the limits
and pursuant to the procedure specified in clause 13 (3) 1) established by the Gover nment
of the Republic.
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)

§ 20. Insurance indemnities
(1) Income tax is charged on benefits for temporary incapacity for work, paid on the
basis of the Health Insurance Act (RT I 2002, 62, 377; 2003, 20, 116; 88, 591; 2004, 37,
253).
(2) Income tax is charged on benefits paid on the basis of the Unemployment Insurance
Act (RT I 2001, 59, 359; 82, 488; 2002, 44, 284; 57, 357; 61, 375; 89, 511; 111, 663; 2003,
17, 95; 88, 591) .
(3) Income tax is charged on amounts paid to a policy holder or beneficiary under a
life insurance contract with an investment risk, from which the insurance premiums made
by the policy holder on the basis of the same contract have been deducted. Such amounts
are subject to taxation if they are paid within twelve years as of the entry into the
insurance contract. If the insurance premiums paid under a life insurance contract with an
investment risk have been deducted from the income of the taxpayer in the form of an
insurance premium on a supplementary funded pension during one or several taxable
periods, the amounts paid to the policy holder are subject to taxation pursuant to § 21.
(4) Income tax is charged on an insurance indemnity paid in a case where the insured
event occurred under non -life insurance conditions if the taxpayer has deducted the
insurance premiums related to such insured event, the acquisition cost of the insured
assets, or the depreciation of fixed assets applied with regard to the same assets on the
basis of the Income Tax Act in force before the entry into force of this Act from the
taxpayer’s business income. The insurance indemnities received are subject to taxation as
gain from the sale of property (§ 37) and the amount of the i nsurance indemnity is
deemed to be the sales price of the property.
(5) Income tax is not charged on sums insured and insurance indemnities not
specified in subsections (1) –(4) or §§ 20
1 and 21, the surrender value payable upon

termination of a life insurance contract, or insurance indemnities paid in the event of
death on the basis of a contract specified in subsection (3).
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)

§ 20
1. Mandatory funded pension
Income tax is charged on paym ents made from a mandatory pension fund to a unit –
holder, the successor of a unit -holder, and on payments made to a policyholder, an
insured person and a beneficiary pursuant to a pension contract provided for in the
Funded Pensions Act.
(23.10.2008 entere d into force 14.11.2008 – RT I 2008, 48, 269)
(2) (Repealed – 17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 21. Supplementary funded pension
(1) Income tax is charged on payments made to a unit -holder or the successor of a
unit -holder on the basis of an insurance contract for a supplementary funded pension or
from a voluntary pension fund, taking into account the specifications provided for in
subsections (2) –(5). Income tax is charged also on negative changes in the provisi ons
formed pursuant to the provisions of subsection 28 (1
1) with a view to securing a
supplementary funded pension.
(2) The rate provided for in subsection 4 (2) is applicable to the following payments
made by an insurer holding an activity licence i n a Contracting State to a policyholder
under an insurance contract for a supplementary funded pension which meets the
conditions provided for in § 63 of the Funded Pensions Act or an equivalent insurance
contract:

(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
1) payments made by the insurer to the policyholder after the policyholder has
reached 55 years of age but not before five years have passed since the entry into the
contract;
2) payments made by the insurer in the event of the total and permanent incapacity
for work of the policyholder;
3) payments made in the event of liquidation of the insurer.
(3) The rate provided for in subsection 4 (2) is applicable to the following payments
made to a unit -holder of a voluntary pension fund founded in Estonia on the basis of the
Funded Pensions Act or a voluntary pension fund operating in a Contracting State on
equivalent bases:
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
1) payments made after t he unit-holder has reached 55 years of age but not before
five years have passed since the acquisition of units which are redeemed in order to make
the payments;
(14.04.2004 entered into force 01.05.2004 – RT I 2004, 37, 252)
2) payments made in the event of the total and permanent incapacity for work of the
unit -holder;
3) payments made from a voluntary pension fund in the event of liquidation of the
pension fund.
(3
1) If units of a voluntary pension fund are exchanged for units of another voluntary
pension fund, the five -year term shall be calculated as of transfer into the securities
account of the units of the voluntary pension fund which are redeemed upon the
exchange. If units of a voluntary pension fund are bequeathed, such term s hall be

calculated as of the date of transfer of the units into the securities account of the
successor of the units.
(23.10.2008 entered into force 14.11.2008 – RT I 2008, 48, 269)
(4) Income tax is not charged on a pension paid to a policyholder on a regular basis
pursuant to an insurance contract specified in subsection (2) after the policyholder has
attained 55 years of age or after his or her total and permanent incapacity for work has
been verified, on the condition that the insurance contract prescribes that corresponding
payments shall be made in equal or increasing amounts at least once every three months
until the death of the policyholder.
(14.04.2004 entered into force 01.05.2004 – RT I 2004, 37, 252; 31.05.2006 entered into
force 01.01.2007 – RT I 2006, 28, 208)
(5) Income tax is not charged on insurance indemnities paid in the event of death on
the basis of an insurance contract for supplementary funded pension.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)

§ 22. Taxation of income of legal persons located in low tax rate territories
(1) Income tax is charged on the income of a legal person located in a low tax rate
territory (§ 10) and controlled by Estonian residents, irrespective of whether the legal
pers on has distributed any profits to taxpayers or not.
(2) A legal person is deemed to be controlled by Estonian residents if one or several
legal or natural persons who are Estonian residents own at least 50 per cent of the shares,
votes or rights to t he profits of the legal person directly or together with associated
persons (§ 8).

(3) The income of a foreign legal person is deemed to be the taxable income of a
resident if the condition prescribed in subsection (2) is fulfilled and the resident owns at
least 10 per cent of the shares, votes or rights to the profits of the legal person directly or
together with associated persons (§ 8).
(4) The part of the gross income of a foreign legal person specified in subsection (2)
which is attributable to a resident taxpayer is deemed to be the income of the taxpayer.
The part attributable to a taxpayer is a proportional part of the income of the legal person,
which corresponds to the holding of the taxpayer in the share capital, total number of
votes or rights to the profits of the legal person.
(5) A taxpayer has, under the conditions prescribed in Chapter 6, the right to deduct
the business -related expenses made by a foreign legal person from the taxable income of
the foreign legal person. In p roportion to the share of a taxpayer in the income of a legal
person, the taxpayer has the right to deduct the part of the income tax withheld from the
legal person on the basis of § 41 and, in accordance with § 45, the part of the home
country income tax paid by the legal person from the income tax to be paid by the
taxpayer.
(6) Resident natural persons shall declare the shares, votes and rights to the profits of
a legal person located in a low tax rate territory which were held by them in the calen dar
year in their income tax returns. A resident taxpayer specified in subsection (3) shall
include the part of the income of a foreign legal person attributable to the taxpayer in the
taxpayer’s taxable income and declare such income in the taxpayer’s income tax return.
The formats of income tax returns and the procedure for declaration of the income of
legal persons registered in low tax rate territories shall be established by a regulation of
the Minister of Finance.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(7) If a resident taxpayer has paid income tax on income specified in subsection (1),
dividends (subsection 18 (2)) or other profit distributions received by the taxpayer out of

the income taxed in accordance with subsection (1) shall not subsequently be subject to
income tax.

Chapter 4
Deductions from Income of Resident Natural Persons

§ 23. Basic exemption
The basic exemption deductible from the income of a resident natural person during a
period of taxation is 1728 e uro.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)

§ 23
1. Increased basic exemption upon provision of maintenance to child
(14.06.2007 entered into force 1.01.2008 – RT I 2007, 44, 318)
(1) One resident parent or guardian of a c hild or other person maintaining a child on
the basis of the Family Law Act, who maintains two or more minor children may deduct
increased basic exemption from his or her income in the period of taxation for each child
of up to 17 years of age, starting wi th the second child.
(18.11.2009 entered into force 01.07.2010 – RT I 2009, 60, 395)
(2) The increased basic exemption is applicable as of the year in which the child is
born, a guardian is appointed for him or her or the maintenance obligation aris es until the
year in which the child attains 17 years of age in so far as the taxable income of the child
is lower than the basic exemption for the period of taxation (§ 23).
(14.06.2007 entered into force 1.01.2008 – RT I 2007, 44, 318)

(3) In the e vent of a dispute, the person to whom child allowance is paid pursuant to §
5 of the State Family Benefits Act is deemed to be the person maintaining the child
within the meaning of subsection (1).
(14.06.2007 entered into force 1.01.2008 – RT I 2007, 44, 318)

§ 23
2. Increased basic exemption in event of pension
If a resident natural person receives a pension paid by a Contracting State pursuant to an
Act, a mandatory funded pension provided for in legislation of such state or a pension
arising from a soc ial security agreement, increased basic exemption shall be deducted
from the income of the person in the amount of those pensions but not more than 2304
euro during a period of taxation.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)

§ 23
3. Increased basic exemption in event of compensation for accident at work or
occupational disease
If a resident natural person receives compensation for an accident at work or an
occupational disease, increased basic exemption shall be deducted from th e income of the
person in the amount of that compensation but not more than 768 euro during a period of
taxation. If compensation for an accident at work or an occupational disease is paid as
insurance indemnity, increased basic exemption shall not apply.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)

§ 24. Maintenance support

A resident natural person has the right to deduct support paid during a period of taxation
from the income which he or she receives during the period of taxation, if such support is
subject to taxation pursuant to subsection 19 (1) or subsection 29 (9), and amounts paid to
satisfy claims for support which have been transferred to the state.
(21.02.2007 entered into force 01.01.2008 – RT I 2007, 25, 130)

§ 25. Housing loan interest
(1) A resident natural person has the right to deduct interest payments made during a
period of taxation to a credit institution which is a resident of a Contracting State, a
financial institution belonging to the same group with s uch company or branch of a non-
resident credit institution registered in a Contracting State for a loan or finance lease
taken in order to acquire a house or apartment for himself or herself from the income
which he or she receives during the period of tax ation. Interest payments for a loan or
lease taken in order to acquire a plot of land in order to build a house may be deducted
from income under the same conditions.
(17.12.2003 entered into force 01.01.2005 – RT I 2003, 88, 587; 31.05.2006 entered into
f orce 01.01.2007 – RT I 2006, 28, 208)
(2) The erection, expansion and reconstruction of construction works within the
meaning of the Building Act, the replacement and modification of utility systems of
construction works, changing the division of spa ce in construction works and the building
and installation work related to the technical refitting of construction works on the basis
of a building permit or building design documentation is also deemed to be acquisition.
(15.05.2002 entered into force 01.01.2003 – RT I 2002, 47, 297; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 587)
(3) Only the loan or finance lease interest payments made upon the acquisition of one
house or apartment shall be deducted from taxable income at any one tim e.

(4) A parent who is raising a child alone and who has taken parental leave during a
period of taxation may fully or partly deduct the interest payments specified in subsection
(1) of this section made during the same taxable period from the income received during
subsequent periods of taxation without taking into account the restriction provided for in
§ 28
2 of this Act.
(29.01.2003 entered into force 01.03.2003 – RT I 2003, 18, 105)

§ 26. Training expenses
(1) A resident natural person has the right to deduct the expenses on the training of
himself or herself or a person of less than 26 years of age who is specified in § 101 of the
Family Law Act and maintained by the person or, if no such training expenses are
incurred, the training expens es of one permanent resident of Estonia of less than 26 years
of age, from the income which the resident natural person receives during the period of
taxation.
(18.11.2009 entered into force 01.07.2010 – RT I 2009, 60, 395)
(2) Training expenses are certified expenses incurred for studying at a state or local
government educational establishment, university in public law, private school which
holds a training licence with regard to the given study programme, is registered in the
Estonian Education Inf ormation System or has the right to provide instruction of higher
education, or foreign educational establishment of equal status with the aforementioned,
or for studying on fee -charging courses organised by such educational establishments.
Training expens es incurred by a person on account of a scholarship or grant which is
exempt from income tax pursuant to clauses 19 (3) 3) and 5) of this Act shall not be
deducted from income.
(19.06.2008 entered into force 01.09.2008 – RT I 2008, 34, 208)
(3)–(4) (Repeal ed – 29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)

§ 27. Gifts and donations
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(1) A resident natural person has the right to deduct gifts and donations of which
there is documented proof and which are made during a period of taxation to persons
included in the list specified in subsection 11 (1), persons specified in subsection 11 (10)
or to a state or local government scientific, cultural, sports, educational or social welfare
institution, a manager of a protected area, or a university in public law from the income
which the resident natural person receives during the period of taxation.
(20.02.2009 entered into force 01.01.2010 – RT I 2009, 15, 93)
(2) (Repealed – 29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(3) The deduction of gifts and donations specified in subsection (1) are limited to 5
per cent of the taxpayer’s income of the same period of taxation, after the deductions
allowed unde r Chapter 6 and §§ 23- 26 have been made.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(4) Gifts and donations specified in subsection (1) may be made in monetary or non-
monetary form. The cost of a non- monetary gift or donation is the market price of the
property, and in the case of sale of the property at a preferential price, the cost of the gift
or donation shall be the difference between the market price and selling price of the
property. Services provided free of charge or at a price below the market price are not
deemed to be gifts or donations and their value is not deducted from income.
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544; 31.05.2006 entered into
force 01.01.2007 – RT I 2006, 28, 208)

§ 28. Insur ance premiums and acquisition of pension fund units

(1) A resident natural person has the right to deduct the following from the income
which he or she receives during a period of taxation:
1) that part of the insurance premiums paid to an insurer holding an activity licence
issued by a Contracting State during the period of taxation under an insurance contract
for a supplementary funded pension which meets the conditions of § 63 of the Funded
Pensions Act or an equivalent insurance contract, the purpose of which is to ensure
payment of the insured sum as a pension;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
2) amounts paid to acquire units of a voluntary pension fund established in Estonia
or a voluntary pension fund operating in a Contracting State on equivalent bases in
accordance with the procedure prescribed in the Funded Pensions Act, except in the cases
prescribed in §§ 56 and 65 of the Funded Pensions Act.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(1
1) The principles of calculation of a part of an insurance premium specified in clause
(1) 1) shall be established by a regulation of the Minister of Finance. A negative change
which occurs in a technical provision established on the basis of an insurance contract
with a view to securing a supplementary funded pension and which is due to deduction of
the amounts charged for an insurance cover not specified in § 63 of the Funded Pensions
Act shall be added to the taxable income of a natural person.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662; 14.04.2004 entered into
force 01.05.2004 – RT I 2004, 37, 252)
(2) The deductions specified in subsection (1) during one period of taxation are
limited to 15 per cent of the taxpayer’s income of the same period of taxation, after the
deductions allowed under Chapter 6 have been made.
(3) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)

§ 28
1. Mandatory social security contributions
(1) Contributions to a mandatory funded pension withheld pursuant to clauses 11 (1)
1) and 2) and calculated and paid pursuant to subsection 11 (2) of the Funded Pensions
Act shall be deducted from the income of a resident natural person during a period of
taxation.
(2) Unemployment insurance premiums withheld on the basis of the Unemployment
Insurance Act shall be deducted from the income received by a resident natural person
during a period of taxation.
(3) A resident natural person has the right to deduct social security payments and
contributions paid in a foreign state during a period of taxation payment of which is
mandatory arising from legislation of the foreign state or an international agreement from
the income which he or she receives during the period of taxation A payment or
contribution may be deducted from income if the objective of payment was to guarantee
pension, health, maternity, unemployment, accident at work or occupational disease
insurance to the person.
(4) Payments and contributions paid in Estonia on account of income not subject to
income tax shall not be deducted from income.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
§ 28
2. Restriction on deductions from taxable income
The deductions provided for in §§ 25- 27 of this Act are altogether limited to 3196 euro
per taxpayer during a period of taxation, and to not more than 50 per cent of the
taxpayer’s income of the same period of taxation, after the deductions relating to
enterprise have been made.
(22.04.2010 entere d into force 01.01.2011 – RT I 2010, 22, 108)

§ 28 3. Restriction on deductions from taxable income of the resident of the member state
of European Union
The deductions provided for in this chapter can be made from the income subject to
taxation in Eston ia also by other European Union resident natural person who derived at
least 75 per cent of his or her taxable income in Estonia and who submits an income tax
return of resident natural person. Taxable income means income before deductions
pursuant to the legislation of the state concerned.
(17.12.2003 entered into force 01.05.2004 – RT I 2003, 88, 587)

Chapter 5
Taxation of Income of Non- residents

§ 29. Non- resident’s taxable income
(1) Income tax is charged on income derived by a non -resident na tural person from
work under an employment contract or in public service or from activities engaged in on
the basis of a contract for services, an authorisation agreement or a contract entered into
for the provision of any other services under the law of obligations if the non- resident
performed his or her duties or provided the services in Estonia and the payment was
made by an Estonian state or local government authority or resident or a non- resident
operating in Estonia as an employer, or if the payment was made through the permanent
establishment (§ 7) of a non- resident legal person registered in Estonia, or if the person
has stayed in Estonia for the purpose of employment for at least 183 days over the course
of a period of 12 consecutive calendar months. If a non- resident who receives
remuneration on the basis of such contract under the law of obligations has been entered
in the commercial register in Estonia as a sole proprietor and such remuneration is his or
her business income, the income is subject to taxation pursuant to subsection (3).

(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(2) Income tax is charged on remuneration paid by a resident legal person to a non-
resident member of a management or controlling body (subsection 13 (2)).
(3) Income tax is charged on business income derived by a non -resident in Estonia (§
14). If the non- resident is a legal person located in a low tax rate territory (§ 10), income
tax is charged on all income derived by the non -resident fro m the provision of services to
Estonian residents, irrespective of where the services were provided or used.
(4) Income tax is charged on gains derived by a non- resident from a transfer of
property (subsection 15 (1)) if:
1) the sold or excha nged immovable is located in Estonia, or
2) the movable subject to entry in a register was in an Estonian register prior to the
transfer, or
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
3) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
4) the transferred holding is a holding in a company, contractual investment fund or
other pool of assets of whose property, at the time of the transfer or during a period
within two years before transfer, more than 50 per cent was directly or indirectly made up
of immovables or structures as movables located in Estonia and in which the non- resident
had a holding of at least 10 per cent at the time of transfer.
5) the transferred holding is a holding of at least 10 per cent in a company of whose
property, according to the balance sheet as of the last day of the preceding financial year,
more than 75 per cent is made up of immovables or structures as movables, which are
located in Estonia.

(5) Income tax is charged on payments specified in subsections 15 (2) and (3) which
are made to a non -resident by a resident legal person.
(5
1) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(6) Income tax is charged on inc ome derived by a non-resident from a commercial
lease or royalties (§ 16) if:
1) the immovable subject to a commercial or residential lease or encumbered with
limited real rights is located in Estonia, or
2) the property subject to a commer cial or residential lease or encumbered with
limited real rights is entered or is subject to entry in an Estonian register, or
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667; 1.05.2006 entered into
force 01.01.2007 – RT I 2006, 28, 208)
3) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
4) the payer of the consideration specified in § 16 is the Estonian state, a local
government, a resident or non- resident through or on account of its permanent
establishment in Estonia.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
5) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
(7) Income tax is charged on interest received by a non -resident from the Estonian
state, a local government or a resident, or from non- resident through or on account of its
permanent establishment registered in Estonia, if it significantly exceeds the amount of
interest payable on the similar debt obligation under the market conditions during the
period of occurrence of the debt obligation and payment of the interest. In that case
income tax is charged on the difference between the interest received and the interest
payable according to market conditions on the similar debt obligations.

(20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
(8) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(9) Income tax is charged on all pensions, scholarships and grants, cultural, sports and
scientific a wards, benefits, lottery prizes paid on the conditions provided in subsections
19 (2) and (3), benefits paid on the basis of the Parental Benefit Act and support and
maintenance allowance specified in subsection 19 (1) which are paid to a non- resident by
t he Estonian state, a local government or a resident. Income tax is charged on insurance
indemnities paid on the conditions provided in §§ 20- 21 to a non-resident by the Estonian
Health Insurance Fund, Estonian Unemployment Insurance Fund or a resident insurance
company, and on payments made from a pension fund registered in Estonia.
(21.02.2007 entered into force 01.01.2008 – RT I 2007, 25, 130)
(10) Income tax is charged on remuneration paid to a non- resident artist, sportsman or
sportswoman in connect ion with his or her performance or competition in Estonia or the
presentation of his or her works in Estonia. Income tax is also charged on remuneration
paid to a non- resident third person in connection with the activities of a resident or non-
resident art ist, sportsman or sportswoman in Estonia.

§ 30. Non- residents whose income is not subject to income tax
(1) Income tax is not charged on income received for the performance of official
duties in Estonia by a foreign diplomatic or consular represent ative, a representative of a
special mission or a member of a diplomatic delegation, a member of a representation of
an international or intergovernmental organisation or co- operation programme, or a
person employed by such representation, who is not a cit izen or permanent resident of
Estonia.
(2) Persons specified in subsection (1), with the exception of members of
representations of co -operation programmes, shall be registered with the Ministry of

Foreign Affairs. The procedure for registration shall be established by a regulation of the
Minister of Foreign Affairs.

§ 31. Non- resident’s income not subject to income tax
(1) Income tax is not charged on the following income of a non- resident:
1) accepted succession;
2) property returned in the course of ownership reform ;
3) expropriation payments and compensation paid upon expropriation, and gains from
the transfer of immovable property to the state or a local government without expropriation
proceedings for the purposes provided for in subsection 3 (1) of the Immovables
Expropriation Act if, prior to the transfer transaction, the requirements provided for in
subsection 3 (4) of the Immovables Expropriation Act are complied with;
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)
4) income from transfer of movable property in personal use ;
5) interest paid to a natural person by a resident credit institution or a branch of a
non- resident credit institution entered in the Estonian commercial register;
(20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
6) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
7) compensation for expenses and daily allowances during assignments abroad
which are specifi ed in clauses 13 (3) 1) and 1
1) under the conditions and within the limits
specified in the same clauses;
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)

8) the contributions specified in clauses 13 (3) 2) and 2 1) on the conditions and
according to the rates specified in the same clauses;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
9) the income specified in clauses 15 (4) 9) -11).
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(2) (Repealed – 20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
(3) (Repealed – 20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
(4) Income tax is not charged on licence fee (§ 16) paid by a resident company or
through or on account of permanent establishment of a resident company of a member
state of the European Union or the Swiss Confederation registered in Estonia, if the
condition specified in clause 1 and at least one of the conditions set in clauses (2) –(4)
have been fulfil led:
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
1) the recipient of licence fee is a resident company of another member state of the
European Union or the Swiss Confederation either directly or through its permanent
establishment r egistered in another member state of the European Union or the Swiss
Confederation;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
2) the company receiving the licence fee owns at the time of payment and has
owned during the period of two years or more immediately preceding the payment at
least 25 per cent of the share capital of the company paying the licence fee;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

3) the company paying the licence fee owns at the time of payment and has owned
during the period of two years or more immediately preceding the payment at least 25 per
cent of the share capital of the company receiving the licence fee;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
4) one and the same resident company of the European Union or the Swiss
Confederation owns at the time of payment and has owned during the period of two years
or more immediately preceding the payment at least 25 per cent of the share capital of the
company pay ing the licence fee and the company receiving the licence fee.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(5) The tax exemption referred to in subsection 4 is not applied to the part of licence
fee which exceeds the value of similar transactions conducted between non -associated
persons.
(20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)

Chapter 6
Deductions from Business Income

§ 32. Expenses related to business
(1) All certified expenses incurred by a taxpayer in relation to business during a
period of taxation may be deducted from the taxpayer’s business income.
(2) Expenses are related to business if they have been incurred for the purposes of
deriving income from taxable business or are necessary or app ropriate for maintaining or
developing such business and the relationship of the expenses with business is clearly

justified, or if the expenses arise from subsection 13 (1) of the Occupational Health and
Safety Act (RT I 1999, 60, 616; 2000, 55, 362; 2001, 17, 78; 2002, 47, 297; 63, 387;
2003, 20, 120).
(3) If expenses incurred by a taxpayer are only partly related to business, only the part
related to business may be deducted from business income.
(4) A sole proprietor may additionally deduct up to 2877 euro during a period of
taxation from his or her income derived from the sale of unprocessed self -produced
agricultural products or timber received from an immovable belonging to him or her after
the deductions prescribed in subsection (1) have been made.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
(5) For the purposes of subsection (4), cleaning, sorting, cutting, drying, cooling and
packaging of agricultural products are not deemed to be processing.

§ 33. Limitatio ns on deduction of expenses
(1) Certified expenses incurred in connection with the provision of catering,
accommodation, transportation or cultural services to guests and business partners may
be deducted in an amount not exceeding 2 per cent of the taxpayer’s business income
during a period of taxation after the deductions allowed under subsections 32 (1) and (4)
have been made.
(2) Expenses incurred in granting fringe benefits may be deducted from business
income only after the income tax pres cribed in § 48 has been paid.

§ 34. Expenses not deductible from business income
The following shall not be deducted from business income:

1) income tax established by this Act, except for income tax paid on the basis of §
48 of this Act;
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
2) (Repealed – 14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
3) fines and penalty payments imposed on the basis of law and interest paid on the
basis of the Taxation Act (RT I 2002, 26, 150; 57, 358; 63, 387; 99, 581; 110, 660; 111,
662; 2003, 2, 17; 48, 341; 71, 472; 82, 554; 88, 591; 2004, 2, 7; 28, 188; 189; 45, 319);
(15.05.2002 entered into force 01.07.2002 – RT I 2002, 44, 284)
4) the cost of property sei zed from the taxpayer;
5) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
6) the environmental charge paid at an increased rate pursuant to the Environmental
Charges Act, and compensation paid for damage caused to the environment or a third
party by pollution or through violation of requirements prescribed by law;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
7) expenses incurred in the provision of benefits not subject to income tax pursuant
t o this Act;
8) the cost of gifts or donations;
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
9) any loss (§ 37) from the transfer, at a price lower than the market price, of
property to a person associated with the taxpay er (§ 8), unless income tax has been paid
on such loss pursuant to § 48;
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)

10) any loss (§ 37) from the transfer, at a price higher than the market price, of
property purchased from a per son associated with the taxpayer (§ 8);
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
11) gratuities and bribes;
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
12) payments and contributions paid in Estonia or a foreign state if the objective of
payment was to guarantee pension, health, maternity, unemployment, accident at work or
occupational disease insurance to the person.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

§ 35. Carrying forward of expenses exceeding business income
(1) If the total amount of the deductions allowed in subsections 32 (1) –(3) exceeds the
business income derived by a taxpayer during a period of taxation, the amount by which
expenses exceed business income (hereinafter expenses carried forward) may be
deducted from business income during up to seven subsequent periods of taxation.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(2) If the amount of expenses carried forward exceeds business income derived
during a period of taxation, the expenses carried forward are partly deducted from
business income derived during the period of taxation and the remaining part of the
expenses is carried forward to subsequent periods of taxation.
(3) If a taxpayer incurs expenses to be carried forward during more than one period of
taxation, such expenses are recorded in accounting documents on a yearly basis in the
order in which they were incurred. Expenses or parts of expenses which have been

carried forward for more than seven years shall not be carried forward to subsequent
periods of taxation.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)

Chapter 7
Rules for Calculation of Taxable Income

§ 36. Calculation of taxable income
(1 ) Income derived by a natural person (including business income) shall be recorded
for income tax purposes during the period of taxation in which such income was derived.
Deductions from taxable income (including expenses related to business) shall be
recorded during the period of taxation in which such expenses were paid. Income tax paid
or withheld shall be recorded during the period of taxation in which the tax was paid or
withheld.
(2) A taxpayer shall keep account of its income and expenses in a manner which
clearly sets out the data necessary for determining the taxable income. A taxpayer is also
required to preserve the documents related to income and expenses.
(3) Business income and deductions therefrom are calculated in accordance with the
rules prescribed in legislation regulating accounting, as far as this Act does not prescribe
otherwise. The calculation method prescribed in subsection (1) also applies to sole
proprietors who use the accrual method of accounting.
(4) If taxable income is received in a non -monetary form, the taxpayer is deemed to
have received income in the amount of the market price of the object or proprietary right
received.

(5) Income, deductions from income, and income tax paid or withheld in fore ign
currency shall be converted into euro on the basis of the European Central Bank
exchange rate on the date on which the income was received, the payment was made or
the income tax was paid or withheld.
(22.04.2010 entered into force 01.01.2011 – RT I 2 010, 22, 108)
(6) Upon declaration of bankruptcy of a natural person, the income and expenses
subject to income tax and income tax paid or withheld shall be recorded separately as
originating in the part of the period of taxation which preceded the declaration of
bankruptcy and in the part which followed.
(7) A sole proprietor entered in the commercial register may open one special account
in a resident credit institution or a branch of a non- resident credit institution entered in
the Estonian commercial register and any increase in the amount in the account during a
period of taxation is deducted from the business income of the same period and any
decrease in the amount in the bank account during a period of taxation is added to the
business income of the same period. The increase in the amount in the special account
during a period of taxation is deducted from the business income of the same period if all
the following conditions are met:
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 6 0, 331)
1) the special account is opened after 1 January 2001;
2) only amounts calculated as business income and benefits received in connection
with business pursuant to law are transferred to the special account within ten working
days as of their receipt;
3) the increase in the amount in the special account during a period of taxation does
not exceed the business income derived by the taxpayer and the amount of benefits
received in connection with business pursuant to law during t he period of taxation, after
the deductions relating to enterprise and permitted for in § 32 have been made.

(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
(8) The interest paid by a credit institution for depositing money in a speci al account
specified in subsection (7) is deemed to be business income derived by the account
holder. In the case of termination of engagement in business, the amount in the special
account is added to the business income.
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)

§ 37. Calculation of gains and loss derived from transfer of property
(1) The gains or loss derived from the sale of property (subsection 15 (1)) is the
difference between the acquisition cost and the selling price of the sold property. The
gains or loss derived from the exchange of property is the difference between the
acquisition cost of the property subject to exchange and the market price of the property
received as a result of the exchange. A taxpayer has the rig ht to deduct certified expenses
directly related to the sale or exchange of property from the taxpayer’s gain or to add
such expenses to the taxpayer’s loss.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(2) In the case of transfer of property the acquisition cost of which the taxpayer has
deducted from the taxpayer’s business income, the selling price of the property or the
market price of the property received through exchange is deemed to be business income
derived by the taxpayer .
(3) If a taxpayer has deducted the depreciation of fixed assets calculated on the basis
of the Income Tax Act in force before the entry into force of this Act from the taxpayer’s
business income and if the fixed assets are transferred, the acquisit ion cost of such fixed
assets is, upon calculation of the gains, reduced by the amount of the depreciation of the
assets.

(4) Upon taking property specified in subsection (2) into personal use (either during
engagement in business or in the case of termination of engagement in business), the
market price of the property is included in the taxpayer’s business income. Upon any
future transfer of such property, the amount which pursuant to this subsection is added to
business income is deemed to be the a cquisition cost of the property.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(5) Upon taking property specified in subsection (3) into personal use (either during
engagement in business or in the case of termination of engagement in business), the
market price of the property minus the difference between the acquisition cost and the
depreciation of fixed assets is included in the taxpayer’s business income. Upon any
future transfer of such property, the amount which pursuant to this subsection is added to
business income is deemed to be the acquisition cost of the property.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(6) If the activities of a sole proprietor are suspended pursuant to the provisions of the
Commercial Code and the activities of a notary, bailiff or sworn translator are suspended
pursuant to the provisions of the Taxation Act for longer than twelve months, the assets
specified in subsections (2) and (3) of this section are deemed to have bee n taken into
personal use.
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(7) If the assets of a sole proprietor which belonged among the assets of an enterprise
are transferred to a company in the form of a non -monetary contribution with the purpose
of continuing the activities of the enterprise, the assets shall not be deemed to have been
taken into personal use.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(8) Upon the transfer of the right to cut standing crop, certified expenses relating to
reforestation shall also be deemed to be expenses related to the transfer and the taxpayer

has the right to deduct the expenses from the income received from the transfer of the
right to cut standing crop during the same period of taxation or following periods of
taxation if all of the following conditions are met:
1) reforestation is carried out, as defined in the Forest Act;
(07.06.2006 entered into force 01.01.2007 – RT I 2006, 30, 232)
2) the owner of the forest has submitted a forest notification concerning the
reforestation works to the Environmental Board pursuant to the procedure provided for in
the Forest Act and the Environmental Board has not prohibited the planned activity.
(18.12.2008 entered into force 01.02.2009 – RT I 2009, 3, 15)

§ 38. Acquisition cost
(1) Acquisition cost means all certified expenses which a taxpayer makes in order to
obtain, improve or supplement property, including any commissions and fees paid.
(2) The acq uisition cost of property acquired by way of a finance lease is the total
amount of contractual lease payments or down payments, without interest.
(3) The acquisition cost of a self -manufactured object means the total amount of
certified expenses incurred in manufacturing the object.
(4) The acquisition cost of property acquired for privatisation vouchers issued to a
natural person by the state or received by succession or from his or her spouse, parent or
child is deemed to be the average selli ng price of the privatisation vouchers as quoted on
the stock exchange on the date of acquiring the property. The acquisition cost of property
acquired before privatisation vouchers came to be quoted on the stock exchange is
deemed to be the average local selling price of the privatisation vouchers on the date of
acquiring the property.

(5) The acquisition cost of a holding (shares, contributions) acquired as a result of a
merger, division or transformation of companies or non-profit co-operatives is deemed to
be the acquisition cost of a holding in the company or non -profit co -operative being
acquired, acquiring or being divided or transformed or contributions made to acquire
such holding, to which additional contributions made during the merger, divi sion or
transformation have been added, and from which payments received have been deducted.
(5
1) The acquisition cost of a holding (shares, contributions) acquired by way of a
non- monetary contribution shall be equivalent to the acquisition cost of t he assets which
constituted the non- monetary contribution. If the acquisition cost of the thing or
proprietary right which constituted a non- monetary contribution has previously been
deducted from the business income of the natural person and income tax ha s not been
charged on it as assets taken into personal use, the acquisition cost of the holding shall be
deemed to be zero.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(5
2) Additional contributions made shall be added to the acquis ition cost determined
pursuant to subsection (5
1) and payments received shall be deducted therefrom. In the
calculation of acquisition cost, supply of labour or other services shall not be considered
to be a non- monetary contribution.
(17.12.2003 entered i nto force 01.01.2004 – RT I 2003, 88, 587)
(6) The acquisition cost of securities of the same class which are acquired at different
prices and different times shall be calculated by consistently applying one of the
following methods:
1) FIFO – transfer takes place in the order of purchase or
2) the weighted average method – the acquisition cost of one transferred security
shall be calculated by dividing the amount of the acquisition costs of securities of the
same class existent at the time of transfer by the number of securities of the same class.

(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
(7) If, in the case of an assets sales transaction with the obligation or right to
repurchase the assets in the future wi thin a specified term and at a specified price (repo
agreement), the repurchase price of the assets is higher than the sales price, the sales price
of the assets sold by way of the repo agreement shall be deemed to be the acquisition cost
of the repurchase d assets.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(8) The acquisition cost of assets on which income tax is charged pursuant to §§ 48
and 49 shall be increased by the amount of income tax charged.
(17.12.2003 entered into forc e 01.01.2004 – RT I 2003, 88, 587)
(9) The acquisition cost of the units of an investment fund which are transferred in the
course of an exchange is deemed to be the acquisition cost of the units acquired upon the
exchange of the units of an investme nt fund specified in clause 15 (4) 11) of this Act.
(14.04.2004 entered into force 01.05.2004 – RT I 2004, 36, 251)

§ 39. Calculation of loss suffered upon transfer of securities
(1) A resident natural person has the right to deduct any loss suffer ed upon the
transfer of securities during a period of taxation from the gains derived from the transfer
of securities during the same period of taxation. Any loss from the transfer, at a price
lower than the market price, of securities to a person associat ed with the taxpayer (§ 8) or
from the transfer of securities acquired from such person at a price higher than the market
price shall not be deducted.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)

(11) If the security giving the rig ht to receive dividends is acquired within thirty days
before the date on which the persons with the right to receive dividends are specified and
is transferred on the date on which the persons with the right to receive dividends are
specified, or within t hirty days after such date, then the loss from the transfer of such
security shall not be deducted from the gains derived from the transfer of other securities.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(2) The amount by which the l oss suffered upon transfer of securities during a period
of taxation exceeds the gains derived from transfer of securities during the same period of
taxation shall not be deducted from the taxable income.
(3) If the amount of loss suffered upon trans fer of securities during a period of
taxation exceeds the amount of gains derived by a taxpayer from transfer of securities
during the same period of taxation, the amount by which the loss exceeds the gains may
be deducted from the gains derived from trans fer of securities during subsequent periods
of taxation.
(4) If the total amount of loss suffered during a period of taxation and carried forward
from previous periods of taxation exceeds the gains derived from transfer of securities
during the period of taxation, the loss is covered only to the extent of the gains from the
period of taxation and the remaining amount of loss is carried forward to subsequent
periods of taxation.

Chapter 8
Withholding of Income Tax

§ 40. Withholding agent for income tax

(1) A withholding agent for income tax is a resident legal person, state or local
government authority, sole proprietor, employer who is a natural person, or non-resident
with a permanent establishment or operating as an employer in Estonia, who makes
payments subject to income tax pursuant to Chapters 3 or 5 of this Act to a natural person
or non- resident.
(2) A withholding agent is required to withhold income tax on payments listed in §
41, pursuant to the rates prescribed in subsection 43 (1). Income tax is withheld upon the
making of a payment. Income tax shall not be withheld on the following payments:
1) payments made to resident legal persons;
2) payments made to non- resident legal persons’ permanent establishments
reg istered in Estonia;
3) payments made to sole proprietors entered in the commercial register if the
payments are the business income of the recipients or are related to acquisition of
property from sole proprietors, including under the conditions of financial lease.
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(2
1) (Repealed – 17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(3) An employer who is a natural person (except a sole proprietor) and a non- resident
who operates as an employer in Estonia but does not have a permanent establishment (§
7) in Estonia are required to withhold income tax only on payments specified in clauses
41 1) and 2).
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
( 3
1) Income tax shall not be withheld on payments specified in clause 41 (1) if the
recipient of the payment performs his or her official duties outside Estonia, and:

1) the payment is made through a resident legal person’s permanent establishm ent in
a foreign country, or
2) the withholding agent has a certificate issued by the foreign tax administrator
stating that the recipient of the payment is a taxable person in the foreign country with
regard to that income.
(17.12.2003 entered int o force 01.01.2004 – RT I 2003, 88, 587)
(4) A withholding agent is required to transfer withheld income tax to the bank
account of the Tax and Customs Board not later than by the tenth day of the month
following the month during which the payment wa s made.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591)
(5) A withholding agent is required to submit a tax return to the regional structural
unit of the Tax and Customs Board by the due date specified in subsection (4). The
format of the tax return and the procedure for completing the form shall be established by
a regulation of the Minister of Finance.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(6) At the request of a taxpayer, a withholding agent is required to issue a certificate
to the taxpayer concerning payments made and the income tax withheld during a calendar
year, broken down by types of income and tax rates, not later than by 1 February of the
year following the withholding of the tax or, if the taxpayer leaves work, together with
the final settlement. The format of the certificate and the procedure for completing the
certifi cate shall be established by a regulation of the Minister of Finance.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)

(7) The income tax of employees of such authorities whose staff, consolidated data or
specific duties constitute a state secret shall be calculated pursuant to the procedure
established by a regulation of the Minister of Finance.

§ 41. Payments from which income tax is withheld
Income tax is withheld from:
1) salaries, wages and other remuneration subject to income tax paid to a resident
natural person (subsection 13 (1)), and remuneration paid to members of the management
and controlling bodies of a legal person (subsection 13 (2)), taking into account the
deductions allowed under § 42;
2) salaries, w ages and other remuneration paid to a non- resident (subsection 29 (1)),
and remuneration paid to non- resident members of the management and controlling
bodies of a legal person (subsection 29 (2));
3) remuneration or service fees paid to a natural person on the basis of a contract for
services, authorisation agreement or any other contract under the law of obligations;
(06.04.2005 entered into force 01.01.2006 – RT I 2005, 22, 148)
4) interest payment subject to income tax paid to a non- resident or to a resident
natural person (subsection 17 (1) and subsection 29 (7));
(20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
5) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
6) insurance indem nities, pensions, payments from a pension fund, scholarships,
grants, lottery prizes, support, maintenance allowance, benefits paid on the basis of the
Parental Benefit Act (subsections 19 (1) and (2), 20 (1) –(3), § 20
1 and subsections 21 (1)

and 29 (9)) or other payments which are subject to income tax and paid to a non- resident
or to a resident natural person, except for the payments specified in clause 12);
(21.02.2007 entered into force 01.01.2008 – RT I 2007, 25, 130)
7) rent from a commercial or residential lease or payment for encumbering a thing
with limited real rights (subsection 16 (1), clauses 29 (6) 1) and 2)), paid to a non-
resident or to a resident natural person, and royalties paid to a resident natural person
(subsections 16 (2) and (3));
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
8) royalties paid to a non- resident (clause 29 (6) 4));
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
9) payments made to a non- resident artist, sportsman or sportswoman for activities
conducted in Estonia, and payments made to a third person who is a non -resident or a
natural person for activities conducted in Estonia by an artist, sportsman or sportswoman
(subsection 29 (10));
10) payments to a non- resident for services provided in Estonia (subsection 29 (3));
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544)
11) payments to a legal person located in a low tax rate territory (§ 10) for services
provided to an Estonian resident (subsect ion 29 (3));
12) payments listed in subsections 21 (2) and (3) which are made to a natural person.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)

§ 42. Deductions upon withholding of income tax

(1) On the basis of a single written application of a taxpayer, one -twelfth of the basic
exemption provided for in § 23 shall, before calculation of the income tax to be withheld,
be deducted in each calendar month from the payments specified in clauses 41 1), 3), 6),
7) and 12) which have been made to the resident natural person.
(1
1) In the case of a pension paid to a resident natural person by the Estonian state
pursuant to an Act and a mandatory funded pension provided for in the Funded Pensions
Act, increased basic exemption f or pensions (§ 23
2) in the amount of that pension shall,
before calculation of income tax to be withheld, be deducted from the pension, although
this deduction shall not exceed one -twelfth of the amount provided for in § 23
2 in each
calendar month.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(1
2) In the case of payment of compensation for an accident at work or occupational
disease made to a resident natural person, increased basic exemption for compensation
for accidents at work an d occupational diseases (§ 23
3) in the amount of that
compensation shall, on the basis of a single written application from a taxpayer, be
deducted from the payment before calculation of income tax to be withheld, although this
deduction shall not exceed one -twelfth of the amount provided for in § 23
3 in each
calendar month.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(2) If a recipient of payments receives taxable income from several withholding
agents, the deduction specified in subsection (1) may only be made by one withholding
agent chosen by the taxpayer.
(2
1) Before calculation of the income tax to be withheld, the portion of basic
exemption specified in subsections (1) and (1
1) of this section which has not been used
for withholding income tax from a pension paid pursuant to an Act may be deducted from
the mandatory funded pension. Before calculation of the income tax to be withheld, the
portion of basic exemption which has not been used for withholding income tax from

payments made on the basis of a pension contract provided for in the Funded Pensions
Act may be deducted from the payments from mandatory pension fund.
(23.10.2008 entered into force 14.11.2008 – RT I 2008, 48, 269)
(2
2) In order to calculate the basic exemption provided for in subsection (2 1) of this
section, the registrar of the Estonian Central Register of Securities, the Social Insurance
Board and insurers providing pension insurance shall exchange data pursuant to the
procedure established by a regu lation of the Minister of Finance.
(23.10.2008 entered into force 14.11.2008 – RT I 2008, 48, 269)
(3) If payments subject to income tax are not made to a taxpayer in each month or if
the payments made in some of the months are smaller than one -twelf th of the basic
exemption provided for in § 23, 23
2 or 23 3, the same withholding agent has the right to
carry the unused part of the deduction of basic exemption specified in subsection (1), (11)
or (12) for such months forward to the subsequent months of the same calendar year.
When pension paid by the Estonian state pursuant to Acts and the mandatory funded
pension provided for in the Funded Pensions Act are paid to a resident natural person, the
basic exemption specified in subsections 42 (1) and (1
1) can be calculated in total from
the beginning of the calendar year.
(20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)
(4) Before calculation of the income tax to be withheld, maintenance support in
compliance with the conditions specified in § 24 which has been withheld from a
payment, if income tax has been withheld from such maintenance support pursuant to
clause 41 (6), and amounts paid to satisfy claims for support which have been transferred
to the state may be deducted from a payment made to a resident natural person in
accordance with § 41.
(21.02.2007 entered into force 01.01.2008 – RT I 2007, 25, 130)

(5) The unemployment insurance premium withheld pursuant to clause 42 (1) 1) of
the Unemployment Insurance Act from a payment made to a resident natural person in
accordance with § 41 shall be deducted from the payment before calculation of the
income tax to be withheld.
(6) The contributions to a mandatory funded pension withheld pursuant to clauses 11
(1) 1) and 2) of the Funded Pensions Act from a payment made to a resident natural
person in accordance with § 41 shall be deducted from the payment before calculation of
the income tax to be withheld.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662; 14.04.2004 entered into
force 01.05.2004 – RT I 2004, 37, 252)

§ 43. Rates of withheld income tax
(1) Income tax is withheld from payments specified in § 41 according to the
following rates:
1) from payments specified in clauses 1) –7) and 11) pursuant to the provisions of
subsection 4 (1) according to the time the payment is made;
(20.06.2005 entered into force 01.01.2006 – RT I 2005, 36, 277)
2) from payments specified in clauses 8) -10) and 12) – 10 per cent;
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
3) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(2) If an international agreement prescribes lower rates for withholding income tax
from a payment made to a non- resident than the rates specified in subsection (1), the rates
prescribed by the international agreement are applied if the withholding agent submits a
document certifying the recipient of income and the residency of the recipient of income

to the regional structural unit of the Tax and Customs Board together with the tax return
specified in subsection 40 (5). The document need not be submitted if data on the
recipient of income and the residency of the recipient of income have been entered in the
register of taxable persons provided for in the Taxation Act.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(3) The requirements for documents specified in subsection (2) shall be established by
a regulation of the Minister of Finance.
(17.12.2003 entered into for ce 01.01.2004 – RT I 2003, 88, 587)
(4) Income tax withheld in accordance with the rates specified in subsection (1) or in
foreign agreements specified in subsection (2) is, for a non- resident recipient, the final
income tax on income from Estonian s ources as regards payments specified in § 41. This
provision does not apply to a non- resident who derives income through a permanent
establishment in Estonia (§ 7).

Chapter 9
Declaration of Income and Payment of Income Tax

§ 44. Income tax returns
(1) A resident natural person is required to submit an income tax return to the
regional structural unit of the Tax and Customs Board concerning the income of a period
of taxation not later than by 31 March of the year following the period of taxation. I t is
possible to submit an income tax return through the e -service of the Tax and Customs
Board as of 15 February of the year following the period of taxation.

(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667; 17.12.2003 entered into
force 0 1.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into force 01.01.2004 – RT I
2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I 2005, 57, 451)
(1
1) The Tax and Customs Board shall complete the income tax return concerning the
income of a resident natural person during a period of taxation and the deductions made
therefrom on the basis of §§ 23, 23
2 and 23 3, § 28 and subsections 28 1 (1) and (2), and
concerning the transfer of the securities specified in subsection 57
1 (5 2) on the basis of
the data at the disposal of the Tax and Customs Board and make the pre -completed tax
return available to the taxpayer through the e -service of the Tax and Customs Board and
at the regional structural unit of the Tax and Customs Board as of 15 February of the year
following the period of taxation. If the taxpayer uses the pre -completed tax return, he or
she is required to verify the correctness of the data contained in the tax return and submit
an amended and supplemented tax return in event of incorrectnes s or deficiency of the
data.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(1
2) A natural person who has not been resident during the whole period of taxation
shall submit an income tax return concerning only income received during the period
when the person was resident and may make deductions allowed under Chapter 4 for the
same period of time. Deductions provided for in §§ 23, 23
1, 23 2 and 23 3 may be made and
the limit on deductions specified in § 28
2 shall be taken into account in proportion to the
number of months during which the person was resident.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(1
3) A resident natural person who received income which, pursuant to subsection 13
(4), 18 (1
1) or an internat ional agreement is exempt from income tax in Estonia is
required to declare such income.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

(2) Resident spouses may submit a joint income tax return if they were married to
each other as of the last day of the period of taxation . If one of the spouses died during
the period of taxation or after the period of taxation but before the submission of the
income tax return, a joint income tax return may be submitted by the surviving spouse. A
joint income tax return may also be submitted if one of the spouses is a resident and the
other spouse is the non- resident specified in § 28
3, or if both of the spouses are residents
of a Member State the European Union and their entire income meets the conditions
provided in § 28
3.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(3) In the case prescribed in subsection 36 (6), a natural person is required to submit
an income tax return within one month after the declaration of bankruptcy.
(4) A non- resident is required to submit an income tax return concerning gains
subject to taxation during the calendar year pursuant to subsections 29 (4) and (5) to the
Tax and Customs Board not later than by 31 March of the following year. In the case o f
transfer of an immovable, the income tax return shall be submitted after receiving the
gains. The income tax return shall be submitted to the regional structural unit of the Tax
and Customs Board.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51 , 286)
(5) A non- resident who derives business income which is subject to taxation in
Estonia (subsection 29 (3)) is required to submit an income tax return concerning
business income derived during the period of taxation. The income tax return shall be
submitted to the regional structural unit of the Tax and Customs Board within six months
following the period of taxation. If engagement in business is terminated before the end
of the period of taxation, the income tax return shall be submitted within two months
following the termination of activities.

(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 2.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(5
1) A no n-resident who derives income subject to taxation on the basis of subsection
29 (1), (6), (7), (9) or (10) from which income tax has not been withheld on the basis of §
41 is required to submit an income tax return concerning such income derived during the
period of taxation to the Tax and Customs Board not later than by 31 March of the year
following the period of taxation.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591)
(6) The following persons are not required to submit an income tax return:
1) a resident natural person whose income does not exceed the rate of basic
exemption provided in §§ 23, 23
2 and 23 3 or whose income of the period of taxation is
not subject to additional income tax, except in the case specified in subsection (6
1);
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
2) persons specified in subsection 43 (4);
3) (Repealed – 31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
(6
1) Sole proprietors, taxpayers specified in subsection 22 (6) or (1 3) of this section
and persons who have transferred securities during the period of taxation who wish to use
the right provided by subsection 39 (3), shall submit an income tax return regardless of
the provision of clause (6) 1).
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(7) The formats of income tax returns and annexes thereto, and the procedure for
completion thereof shall be established by a regulation of the Minister of Finance.

§ 45. Calculation of income tax paid abroad
(1) If a resident taxpayer has derived income from abroad during a period of taxation,
all income derived from abroad is included in the taxable income of the person and
income tax paid or withheld on such income abroad is deducted from the income tax to
be paid, in accordance with the conditions specified in subsections (2) –(6). Income tax is
calculated separately for income derived in Estonia and for income derived in each
foreign country. Income tax paid in a foreign country on income which is not subject to
tax in Estonia shall not be taken into account.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 587)
(2) If the income tax calculated in accordance with this Act on income derived in a
foreign country exceeds the amount of income tax paid in the foreign country, the
taxpayer is required to pay the difference between the foreign incom e tax and Estonian
income tax as income tax to be paid in Estonia.
(3) If the income tax calculated on income derived in a foreign country is less than the
income tax paid in the foreign country or if the income tax calculated according to the
taxpay er’s income tax return on income from all sources is less than the income tax paid
in the foreign country, the overpaid amount of income tax paid in the foreign country is
not refunded in Estonia.
(4) If a resident natural person has derived taxable income pursuant to subsection 18
(4) or § 22, he or she has the right to deduct a proportional share of the income tax paid
or withheld abroad by a foreign legal person, association of persons or pool of assets,
which corresponds to the resident’s share of profit taxable as income, from the income
tax to be paid by him or her.

(5) Income tax paid or withheld in a foreign country may be deducted from income
tax payable in Estonia only if the taxpayer submits a certificate issued by the foreign tax
admi nistrator or withholding agent certifying the payment of income tax or another tax
equivalent to income tax.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
(6) If more income tax is paid or withheld in a foreign country than prescribed by the
law of the country or an international agreement, only the mandatorily payable part of the
income tax of the foreign country may be deducted from income tax payable in Estonia.
(7) If the income tax on income derived in a foreign country is paid during a taxable
period different from the period when the income was derived, it shall be taken into
account in Estonia during the taxable period when the income taxable in a foreign
country was received.
(20.05.2004 entered into force 01.01.2005 – RT I 2004, 45, 319)
(8) If a resident natural person has received interest from which income tax has been
withheld arising from Council Directive 2003/48/EC on taxation of savings income in the
form of interest payments (OJ L 157, 26.06.2003, pp 38–48) or from an agreement
concluded by Estonia or the European Union on the basis of that directive, then the
withheld income tax may be deducted from the income tax payable on the income of the
same period of taxation in Estonia. The part of income tax not deducted shall be returned
by the due date provided in subsection 46 (6).
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

§ 46. Payment and refund of income tax
(1) The regional structural unit of the Tax and Customs Board shall calcul ate any
additional amount of tax due (additional amount due) and issue a written tax notice to this

effect to the taxpayer. Spouses who submit a joint income tax return are solidarily liable
for payment of any additional amount of tax due and a common tax notice is issued to
them. Tax notices are not issued to non-residents.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667; 24.10.2001 entered into
force 01.01.2002 – RT I 2001, 91, 544; 17.12.2003 entered into force 01.01.2004 – RT I
2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I 2005, 57, 451)
(2) Income tax withheld or paid during a period of taxation on the basis of §§ 41 and
47 is deducted from the total income tax of the period of taxation. Income tax withheld or
paid in a foreign country is also deducted to the extent specified in § 45.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
(3) Except in the cases specified in subsections (4) and (5), a taxpayer is required to
pay any additional amount due which is specified in the tax notice into the bank account
of the Tax and Customs Board not later than by 1 July of the calendar year following the
period of taxation.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591)
(4) A resident natural person who declares business income or gains from the transfer
of property is required to pay any additional amount due which is specified in the tax
notice into the bank account of the Tax and Customs Board not later than by 1 October of
the calendar year following the period of taxation.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591)
(5) A non- resident who derived taxable business income, gains specified in
subsection 44 (4) or income specified in subsection 44 (5
1) shall pay any additional
amount of tax due into the bank account of the Tax and Customs Board within three
months after the due date for submitting income tax returns specified in subsection 44
(4), (5) or (5
1). If property is paid for in instalments, income ta x must be paid within a
period of three months after derivation of the gains subject to taxation.

(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(6) The Tax and Customs Board shall refund the amount of tax overpaid by a natural
person to the bank account of the taxpayer or his or her spouse indicated in the tax return
or, on the basis of a written application of the taxpayer, to the bank account of a third
person, except in the cases prescribed in the Taxation Act. Overpaid amounts of tax shall
be refunded not later than by the due date prescribed in subsection (3) or, in the case of
taxpayers specified in subsection (4), by the due date specified in subsection (4).
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591)

§ 47. Advance payments
(1) A sole proprietor who derived business income during a previous period of
taxation is required to make advance payments of income tax during the period of
taxation. The size of an advance payment is one- quarter of the total amount of income tax
calculated on the business income derived by the person during the previous period of
taxation.
(31.05.06 entered into force 01.07.06 – RT I 2006, 28, 208)
(2) Advance paym ents shall be made into the bank account of the Tax and Customs
Board in equal amounts by the fifteenth day of the third month of each quarter, starting
from the quarter following the due date for submitting the income tax return. Advance
payments need not be paid if the quarterly payment does not exceed 64 euro.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
(3) A taxpayer who derives business income is not required to make advance
payments of income tax during the first period of taxation.

(4) A sole proprietor whose business is registered in the commercial register as
temporary or seasonal is not required to make advance payments of income tax.
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(5) The Tax and Customs Board has the right to reduce the size of advance payments
or exempt a taxpayer from making advance payments if the taxpayer’s estimated business
income during the period of taxation is considerably smaller than the income of the
previous peri od of taxation and if the taxpayer submits a corresponding reasoned
application.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591)

Chapter 10
Special Cases of Payment of Income Tax

§ 48. Income tax on fringe benefits
(1) An employer shall pay income tax on fringe benefits granted to employees.
(2) For the purposes of subsection (1), an employer is a resident legal or natural
person, a state or local government authority, or a non- resident who has a permanent
establishment in Es tonia (§ 7) or whose employees work in Estonia.
(3) For the purposes of subsection (1), an employee is a person employed under an
employment contract, a public servant (subsection 13 (1)), a member of the management
or controlling body (§ 9), or a na tural person who sells goods to an employer during a
period longer than six months. A natural person who works or provides services on the
basis of a contract for services, authorisation agreement or any other contract under the

law of obligations is also deemed to be an employee within the meaning of subsection
(1).
(24.10.2001 entered into force 01.01.2002 – RT I 2001, 91, 544; 11.12.2002 entered into
force 01.01.2003 – RT I 2002, 111, 662)
(4) Fringe benefits are any goods, services, remuneration i n kind or monetarily
appraisable benefits which are given to a person specified in subsection (3) in connection
with an employment or service relationship, membership in the management or
controlling body of a legal person, or a long -term contractual relat ionship, regardless of
the time at which the fringe benefit is granted. Fringe benefits include:
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667; 24.10.2001 entered into
force 01.01.2002 – RT I 2001, 91, 544; 17.12.2003 entered into force 01.01.2004 – RT I
2003, 88, 587)
1) full or partial covering of housing expenses;
2) the use of a vehicle or other property of the employer free of charge or at a
preferential price for activities not related to employment or service duties or to the
employer’s business;
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
3) payment of insurance premiums, unless such obligation is prescribed by law;
4) compensation for official travel expenses and payment of daily allowances during
assignments abroad, in so far as they exceed the limits provided for in clause 13 (3) 1)
(clause 13 (3) 1) and clause 31 (1) 7)) or in force in the place where the work is
performed if the work is performed in a foreign state (clause 13 (3) 1
1));
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)

5) compensation for use of a private automobile, in so far as it exceeds the limits
provided for in clause 13 (3) 2) (clauses 13 (3) 2) and 2
1) and clause 31 (1) 8));
(26.02.2009 entered into force 01.07.2009 – RT I 2009, 18, 109)
6) loans given with lower interest than the minimum rate established by the Minister
of Finance;
7) transfer free of charge or sale or exchange at a price lower than the market price,
of a thing, security, proprietary right or service;
8) purchase of a thing, security, proprietary right or service at a price higher than the
market price;
9) waiver of a monetary claim, unless the estimated reasonable costs of collecting
the monetary claim exceed the claimed amount;
10) coverage of expenses relating to formal or informal education acquired in the
adult education system within the meaning of § 3 of the Adult Education Act (RT I 1993,
74, 1054; 1998, 71, 1200; 1999, 10, 150; 60, 617; 2002, 90, 521; 2003, 20, 116; 71, 473;
2004, 41, 276), except for the expenses relating to the formal education acquired within
the adult education system by an official of a security authority.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)
(5) Fringe benefits do not include cash payments ordinarily regarded as salary, wages,
additional remuneration, additional payments, remuneration of a member of a
management or controlling body, or payments for goods or services. Payments made to
natural persons on which income tax has been withheld on the basis of § 41 or which
pursuant to §§ 13–21 or §§ 30–31 are not subject to income tax are also not classified as
fringe benefits.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)

(51) Expenses incurred to transport employees between their residence and their place
of employment are not classified as fringe benefits if it is impossible to make the journey
using public transport with a reasonable expenditure of time and money, or if
handicapped employees are enable to use public transport or if use of public transport
would cause a material decrease of the persons’ ability to move or work.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(6) Ben efits specified in subsection (4) which an employer grants to the spouse,
parent or child of a person specified in subsection (3) are also deemed to be fringe
benefits.
(7) In general, the price of a fringe benefit shall be determined on the basis of the
market price of the goods or services provided as a fringe benefit. The minimum rate
specified in clause (4) 6) shall not be higher than twice the interest rate applicable to the
main refinancing operations of the European Central Bank. The procedure for
determining the price of a fringe benefit shall be established by a regulation of the
Minister of Finance.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(8) The maximum price of a fringe benefit for the use of an automobile of t he
employer free of charge or at a preferential price for activities not related to employment
or service duties or to the employer’s business is 256 euro per month for each automobile
used for the activities specified. The price of such fringe benefit sha ll be determined
according to the use of the automobile as a fringe benefit and on the basis of the records
maintained pursuant to the procedure established by the Minister of Finance. If no
records are maintained, the maximum price shall be taken as the b asis for taxation.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)

§ 49. Income tax on gifts, donations and costs of entertaining guests

(1) Resident legal persons, except persons included in the list specified in subsection
11 (1) and persons specified in subsection 11 (10), shall pay income tax on gifts and
donations on which income tax has not been withheld on the basis of § 41 or not been
paid on the basis of § 48, taking into consideration the specifications provided in
subsections (2) and (4). Lottery prizes received from a commercial lottery with the prize
fund of up to 10 000 euro are also deemed to be gifts. Income tax is not charged on goods
transferred or services provided for the purposes of advertising whose value excluding
value added tax is up to 10 euro. Gifts and donations made by persons included in the list
specified in subsection 11 (1) and persons specified in subsection 11 (10) a re subject to
taxation pursuant to the procedure provided in subsection (6).
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
(2) Income tax is not charged on gifts and donations made to persons included in the
list specified in subsection 11 (1), persons specified in subsection 11 (10), to a person
who owns a hospi tal, to a state or local government scientific, cultural, educational,
sports, law enforcement or social welfare institution, or a manager of a protected area in a
total amount not exceeding one of the following limit values:
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
1) 3 per cent of the amount of the payments subject to social tax pursuant to clauses
2 (1) 1) -4) and 6) of the Social Tax Act (hereinafter individually registered social tax)
made by the taxpayer during the same calen dar year;
2) 10 per cent of the profits for the last financial year of a taxpayer dissolved as of 1
January of a calendar year, calculated pursuant to the legislation regulating accounting.
(3) The taxpayer has the right to calculate the gift s and donations specified in
subsection (2) made during the calendar year in total. The taxpayer shall determine the
total annual exemption for such gifts and donations, based on only one limit value of the
taxpayer’s choice specified in the same section.

(4) Income tax is not charged on payments by persons included in the list specified in
subsection 11 (1) and persons specified in subsection 11 (10) made in connection with the
provision of catering, accommodation, transportation or cultural services to guests and
business partners. In the case of other resident legal persons, income tax is not charged on
such payments in the amount of up to 32 euro per calendar month. In addition, if such
legal person is making payments subject to individually regist ered social tax, the legal
person may make, in a calendar month, payments exempt from income tax in connection
with the provision of catering, accommodation, transportation or cultural services to
guests and business partners in the amount of up to 2 per c ent of the total amount of the
payments subject to individually registered social tax made by the legal person during the
same calendar month.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
(5) If, during some months of a calendar year, a resident legal person has not made
the payments specified in subsection (4) or has made them in an amount below the limit
values for exemption provided in the same subsection, the legal person has the right to
apply recalculation in total to the pa yments made during that month and the following
months until the end of the calendar year.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(6) Persons included in the list specified in subsection 11 (1) and persons specified in
subsec tion 11 (10) shall pay income tax on all gifts and donations on which income tax
has not been withheld on the basis of § 41 or not been paid on the basis of § 48, except
the following gifts and donations made in pursuance of the objectives set out in their
articles of association:
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
1) gifts and donations made to persons included in the list specified in subsection 11
(1) and specified in subsection 11 (2), or to a person who owns a hospital;

2) gifts and donations made to a state or local government scientific, cultural,
educational, sports, law enforcement or social welfare institution, or a manager of a
protected area;
3) material assistance granted to a natural person for s ubsistence, including financial
assistance to the extent of the amount of average monthly expenses of a member of a
household per calendar month according to the latest information disseminated by the
Statistical Office;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
4) souvenirs presented to participants in a youth camp or project camp in the amount
of up to 32 euro per participant in camp or project;
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
5) souveni rs presented at a sports event to the participants in the event, in the
amount of up to 32 euro per participant in event.
(22.04.2010 entered into force 01.01.2011 – RT I 2010, 22, 108)
(7) (Repealed – 17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

§ 50. Income tax on dividends and other profit distributions
(1) A resident company (including a general or limited partnership) shall pay income
tax on profit distributed as dividends or other profit distributions upon payment the reof in
monetary or non- monetary form. Income tax is not charged on profit distributed by way
of a bonus issue.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(1
1) The income tax provided in subsection (1) is not charged on dividends if:
1) the resident company paying the dividend has derived the dividend which is the
basis for the payment from a resident company of a Contracting State or the Swiss

Confederation which is taxable with income tax (except for companies located within a
low tax rate territory) and at least 10 per cent of such company’s shares or votes belonged
to the company at the time of deriving the dividend;
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
2) the dividend is paid out of profit attributed to a resident company’s permanent
establishment located in a Contracting State or the Swiss Confederation;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
3) the company paying the dividend has derived the dividend whi ch is the basis for
payment from a company of a foreign state not specified in clause (1) (except for a
company located within a low tax rate territory) and at the time of deriving the dividend,
the company owned at least 10 per cent of the shares or votes of such company, and
income tax has been withheld from the dividend or income tax has been charged on the
share of profit which is the basis thereof;
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
4) the dividend is paid out of the profit attributed to a foreign permanent
establishment of a resident company and such profit is subject to income tax;
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
5) the dividend is paid from the portion of payments specified in ( 2
1).
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(1
2) In the cases specified in clauses (1 1) 3) and 4), only the income tax subject to
payment pursuant to law or an international agreement shall be taken into account.
(31.05.06 ent ered into force 01.01.07 – RT I 2006, 28, 208)

(2) A resident company shall pay income tax on the portion of payments made from
the own capital upon reduction of the share capital or contributions, upon redemption or
return of shares or contributions (hereinafter holding) or in other cases, and on the portion
of the paid liquidation distributions which exceed the monetary or non- monetary
contributions paid into the own capital of the company.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(2
1) Taking account of the percentage of holding provided for in subsection (1 1) and
subsection (1
2), income tax is not charged on payments specified in subsection (2) the
bases for which are the dividends specified in subsection (1
1) or the port ion of the
payments specified in subsection (2) which are received by the company if the dividends
or portion of the payments are or the share of profit which is the basis of the dividends or
portion of the payments is subject to income tax. In the case of several recipients of a
payment specified in subsection (2) and forward payment, tax exemption is applied to the
received portion of payment which is proportional to the portion of the payment subject
to tax.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(2
2) A resident company which is deleted from the register without liquidation shall
pay income tax on the part of the own capital which exceeds the monetary or non-
monetary contributions paid into the own capital of the company. Th is subsection does
not apply if the assets of the company deleted from the register is continuously used in
economic activities in Estonia. If the economic activities are continued through another
resident company, tax on the specified part of own capital shall be charged pursuant to §§
48–52. If the company maintains a permanent establishment in Estonia, tax on the
specified part of own capital shall be charged pursuant to § 53.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(2
3) If an enterprise belonging to a permanent establishment of a non- resident legal
person is transferred to a resident company, the property brought into Estonia for the

purposes of the permanent establishment before the transfer of the enterprise is also
deemed to be monetary and non-monetary contributions paid into the own capital of the
company.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(3) (Repealed – 06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(4) If the value of a transaction conducted between a resident legal person and a
person associated with the resident legal person differs from the value of similar
transactions conducted between non- associated persons, the tax administrator may, upon
determining the income tax, use the values of transactions applied by non- associated
independent persons under similar conditions.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(5) In the case specified in subsection (4), income tax is charged either o n the income
which the taxpayer would have derived or the expense which the taxpayer would not
have incurred if the value of the transaction conducted with the associated person had
been such as applied by non- associated independent persons under similar c onditions.
(6) The methods for determining the value of transactions specified in subsection (4)
shall be established by a regulation of the Minister of Finance.
(7) For implementation of subsection (4), a resident company is required to submit
additional information on the transactions with associated persons, activity of companies
belonging to the same group and structure of the group at the demand of a tax authority.
The tax authority shall grant the company a term of at least sixty days for submitting such
information.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(8) The requirements for the information specified in subsection (7) shall be
established by a regulation of the Minister of Finance.

(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(9) If the taxpayer so demands, the payer specified in subsection 50 (2) is required to
issue a certificate regarding payments specified in subsection 50 (2) which are made
during a calendar month by the fifth day of the following calendar month. The certificate
shall set out the total amount of the payment and the portion of the payment if the
payment or the share of profit which is the basis for the payment is subject to income tax.
The format of the certificate and the procedure for completing the certificate shall be
established by a regulation of the Minister of Finance.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)

§ 51. Income tax on expenses not related to business
(1) A resident compan y shall pay income tax on expenses not related to business
unless income tax has been paid on such expenses in accordance with §§ 48–50 of this
Act.
(2) For the purposes of subsection (1), expenses not related to business are:
1) expenses or payments specified in clauses 34 3) –6) and 11);
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 587)
2) entrance and membership fees paid to non- profit associations, unless participation
in such associations is directly related to the business of the taxpayer;
3) payments concerning which the taxpayer does not have a source document in
compliance with the requirements prescribed in legislation regulating accounting;
4) expenses incurred or payments made in order to purchase services not related to
the business of the taxpayer;

(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
5) expenses incurred or payments made in order to fulfil obliga tions not related to
the business of the taxpayer.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(3) A resident non- profit association, foundation or religious association which is a
legal person shall pay income tax on expenses and payments specified in clauses (2) 1)
and 3) and in § 52 and on expenses incurred in purchasing services or property not related
to the activities specified in the person’s articles of association (including business
permitted by the articles of association).
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)
(4) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(5) Expenses specified in clauses 13 (3) 6) -10) are not deemed to be expenses not
related to bu siness.

§ 52. Income tax on other payments not related to business
(1) Resident companies, except credit institutions, shall pay income tax on payments
not related to business, unless income tax has been withheld on such payments on the
basis of § 41 or paid pursuant to §§ 48–51.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
(2) For the purposes of subsection (1), payments not related to business are the
following:
1) acquisition of property not related to business;

(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
2) acquisition of securities issued by a legal person located in a low tax rate territory
(§ 10) unless such securities meet the requirements specified in subsection 257 (1) of the
Inv estment Funds Act;
(20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
3) acquisition of a holding in a legal person located in a low tax rate territory;
4) payment of a fine for delay or a contractual penalty, or extra -judicial
compensation for damage, to a legal person located in a low tax rate territory;
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
5) grant of a loan or making of an advance payment to a legal person located in a
low tax rate territo ry or acquisition of a right of claim against a legal person located in a
low tax rate territory in any other manner.
(3) Resident credit institutions shall pay income tax on the following payments and
losses unless income tax has been withheld on such payments on the basis of § 41 or paid
pursuant to §§ 48–51:
1) payments specified in clauses 2 (1) and (2);
2) payments specified in clause (2) 4), unless such payments are made to a credit or
financial institution which according to the law of its home country meets the
requirements for institutions equal to Estonian credit or financial institutions;
3) losses sustained by a credit institution when it transfers a right of claim or waives
the collection of a right of claim (includ ing loans granted and advance payments made)
acquired against a legal person located in a low tax rate territory.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)

§ 53. Taxation of permanent establishment of non-resident in Estonia
(1) A non- resident legal person who has a permanent establishment registered in
Estonia (§ 7) shall pay income tax pursuant to §§ 48- 52, taking into consideration the
specifications provided in this section.
(2) All fringe benefits granted by a non -re sident to its employees or members of the
management or controlling body through or on account of its permanent establishment
are subject to income tax pursuant to § 48, irrespective of whether the recipient of fringe
benefits is a resident or non -resident .
(3) Gifts and donations made and costs of entertaining guests incurred by a non –
resident through or on account of its permanent establishment are subject to income tax
pursuant to § 49, irrespective of whether the recipient of the gifts or donations, or the
guest or business partner is a resident or non- resident. Representatives of the non-
resident’s head office or other structural unit located outside Estonia are also deemed to
be guests or business partners.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
(4) On the basis of § 50, income tax is imposed on:
1) the cost of property which is taken out of a permanent establishment, in the
amount which exceeds the total amount of the cost of property of the permanent
establ ishment located in Estonia before the entry into force of this Act and the cost of
property brought into Estonia for the purposes of the permanent establishment after the
entry into force of this Act, unless other property or a service is provided in retur n for
such property;
2) payments made through or on account of a permanent establishment to the head
office or other structural units of the non- resident, if no goods or services are received in
return for such payments;

3) payments made to third parties through or on account of its permanent
establishment, if no goods or services are received in return for such payments.
(24.10.2001 entered into force 01.01.2003 – RT I 2001, 91, 544)
(4
1) The income tax provided in subsection (4) is not charged on payments made by a
non- resident through its permanent establishment or out of the profit derived from its
permanent establishment provided that at the time the dividend was derived, the recipient
of the dividend owned at least 10 per cent of t he shares or votes of the company paying
the dividend, and if:
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
1) the dividend was derived from a resident company of a Contracting State or the
Swiss Confederation taxable with income tax (except for companies located within a low
tax rate territory);
2) the dividend was derived from a company of a foreign state not specified in
clause (1) (except for a company located within a low tax rate territory) and income tax
has been wi thheld from the dividend or income tax has been charged on the share of
profit on which is the basis thereof.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(4
2) In the cases specified in clause (4 1) 2), only the income tax subject to pay ment
pursuant to law or an international agreement shall be taken into account.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(4
3) If a resident company is deleted from the commercial register without liquidation
and the economic activit ies of the company are continued in Estonia through the
company’s permanent establishment, then the part of the cost of the property taken out of
the permanent establishment based on clause (4) 1) in excess of the amount specified in
the clauses below is s ubject to taxation:

1) the own capital of the resident company as at 31 December 1999;
2) monetary and non- monetary contributions paid into the own capital as of 1
January 2000;
3) the cost of property brought to Estonia for the per manent establishment after the
deletion of the company from the commercial register.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(4
4) Clause (4) 1) does not apply in the case of transfer of an undertaking belonging to
the permanent est ablishment to another company in the form of non- monetary
contribution, or in the course of merger, division or transformation if economic activities
are continued in Estonia through such enterprise. If the undertaking is acquired by a non-
resident compan y, then the cost of the property brought in for the permanent
establishment by the company which transferred the undertaking is deemed to be the cost
of the property brought in for the permanent establishment. If the transferred undertaking
belongs to a pe rmanent establishment which was created in the manner indicated in
subsection (4
3) then the total of the amounts specified in clauses (4 4) 1) -3) is deemed to
be the cost of the property brought in for the permanent establishment.
(31.05.06 entered into for ce 01.01.07 – RT I 2006, 28, 208)
(4
5) Property to be taken out is subject to tax in the part for which no other property or
service is provided in return.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(4
6) Subsections 50 (4) -(8) al so applies to transactions concluded through or on
account of the permanent establishment of a non- resident legal person.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

(47) Taking account of the percentage of holding provided for in subs ection (4 1) and
subsection (4
2), the income tax provided in subsection (4) is not charged on payments the
basis for which is the portion of the payments specified in subsection 50 (2
1) which is
received through or on account of a permanent establishment of a non-resident.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(5) All expenses and other payments not related to business made through or on
account of the income of a permanent establishment are subject to income tax pursuant to
§ 51 and § 52. Payments not related to business and made through a branch of a non-
resident credit institution entered in the Estonian commercial register are subject to
taxation on the basis of § 51 and subsection 52 (3).
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)

§ 54. Declaration and payment of income tax
(1) A person or authority which grants fringe benefits taxable on the basis of § 48 is
required to submit a tax return to the regional structural unit of the Tax and Customs
Board by the tenth day of the calendar month following the period of taxation regarding
the fringe benefits granted during the calendar month.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 12.10.2005 entered into
force 18.11.2005 – RT I 2 005, 57, 451)
(2) Resident legal persons and non- resident legal persons specified in § 53 are
required to submit a tax return regarding the expenses and payments specified in §§ 49-
53 concerning the previous calendar month to the regional structural unit of the Tax and
Customs Board by the tenth day of the calendar month following the period of taxation.
A taxpayer who is a registered person liable to value added tax as defined in the Value
Added Tax Act is required to submit a return regardless of the obligation to pay income
tax during that period of taxation.

(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(3) The format of the tax return specified in subsections (1) and (2) and of the
annexes thereto, and the procedure for completion thereof shall be established by a
regulation of the Minister of Finance.
(4) A taxpayer is required to transfer the income tax payable on the basis of §§ 48- 53
to the bank account of the Tax and Customs Board not later than by the tenth day of the
calendar month following the period of taxation.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591)
(5) If a resident company or a non -resident has received income specified in
subsection 50 (1
1) or (2) from a non -resident company through a permanent
establishment registered in Estonia and the income fails to meet the requirements
specified in subsection (1
1) or (2 1), or has received income not specified in subsection 50
(1
1) or (2) in a foreign state, the recipient of income may deduct the income tax paid or
withheld from such income abroad from the income tax payable on the basis of
subsection 50 (1) or (2) or subsection 53 (4). The income tax of a foreign state may be
deducted only in the amount which it is mandatory to pay pursuant to the law of the state
or an international agreement. Income tax paid in each state shall be recorded separately.
Income tax p aid in a foreign state on income which was the basis of the payment not
taxable according to the subsections 50 (1
1) or (1 2) or 53 (4 1) or (4 7) shall not be taken
into account.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(5
1) (Repealed – 20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)
(5
2) (Repealed – 20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)

(53)–(5 4) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51,
286)
(6) If a taxpayer applies the calculation in total specified in subsections 49 (3) and (5)
or if circumstances which are the bases for taxation pursuant to clauses 51 (2) 3) –5) or
subsections 51 (3), 52 (2) and (3) or 53 (4) cease to exist, the taxpayer has the right to
recalculate the income tax and demand a refund of overpaid amounts of income tax. Such
recalculations are made in the tax return specified in subsection (2). Overpaid amounts of
income tax are refunded pursuant to the procedure provided for i n the Taxation Act.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)

Chapter 11
Notification Requirement

§ 55. Submission of annual reports
(1) A resident company, non- profit association, foundation, legal person entered in
the reg ister of religious associations or legal person in public law is required to submit a
signed original copy of its annual report to the regional structural unit of the Tax and
Customs Board within six months following the end of the financial year. The pers on
who is obliged to submit the annual report to the commercial register or the non- profit
associations and foundations register pursuant to legislation, need not submit the report.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 20.05.2004 entered into force 27.05.2004 – RT I
2004, 45, 319; 12.10.2005 entered into force 18.11.2005 – RT I 2005, 57, 451;
31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)

(2) A non-resident which has a permanent establishment in Estonia (§ 7) is required
to submit a signed original copy of the annual report of its permanent establishment to the
regional structural unit of the Tax and Customs Board within six months following the
en d of the financial year.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)

§ 56. Notification of payments made to shareholders
(1) Upon reduction of dividends paid and other profit distributions, liquidation
distributions, share capital or contributions and upon redemption or return of shares or
contributions or in other cases, a resident company is required to submit a tax return to
the Tax and Customs Board concerning the amount and the recipients of payments made
from own capital during the period of taxation. The tax return shall also be submitted
concerning the received dividends specified in subsection 50 ( 1
1) and the amount of
payments and payers specified in subsection 50 (2
1).
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(2) A notice shall set out the name, personal identification code or registry code, and
address of the recipien t of a payment, the size of the payment made to the person, and the
nominal value of the person’s share or contribution before and after the payment is made.
(2
1) (Repealed – 20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(3) A t ax return specified in subsection (1) shall be submitted by the tenth day of the
calendar month following the making of the payment. The format of the tax return and
the procedure for completing the form shall be established by a regulation of the Minister
of Finance.

(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)

§ 56
1. Notification of compensation for use of personal automobile
A resident legal person, state agency or local government agency, employer who is a sole
proprietor, or a non- resident who has a permanent establishment in Estonia or who is
acting as an employer in Estonia who has made, during a calendar year, the payments
specified in clauses (3) 2) or 2
1) to a natural person is required to submit a tax return
concerning such pa yments by 10 April of the year following the calendar year to the Tax
and Customs Board. The format of the tax return and the procedure for completing the
form shall be established by a regulation of the Minister of Finance.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

§ 57. Notification of register entries
(1) The land registries and registration departments of courts, the registrar of the
national civil aircraft register, the registrar of the national motor vehicle register and the
registrar of the national tractor register are required to submit to the Tax and Customs
Board within one month after making a registry entry a tax return concerning the
following:
1) transactions by which a foreign legal person or a foreign citize n or stateless
person without a residence permit in Estonia has transferred immovable property, limited
real rights or a movable entered in a register or has assigned the ranking of a limited real
right;
2) transactions by which an immovable or a m ovable entered in a register is
encumbered with a limited real right in favour of a foreign legal person or a foreign
citizen or stateless person without a residence permit in Estonia.

(2) The format of the tax return and the procedure for completing the form shall be
established by a regulation of the Minister of Finance.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

§ 57
1. Notification requirement relating to tax incentive
(1) Resident credit and financial institutions and branches of non- resident credit
institutions entered in the Estonian commercial register may submit declarations to their
regional structural units of the Tax and Customs Board concerning the interest paid by
natural persons during a calendar year on loans one aim of which is acquisition of
housing (including construction of housing).
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(2) State or local government educational institutions, universities in public law and
private schools holding education licences, registered in the Estonian Education
Information System or having the right to provide instruction of highe r education, are
required to submit declarations concerning training expenses specified in § 26 and paid
during a calendar year by natural persons to the Tax and Customs Board.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)
(3) Persons included in the list specified in subsection 11 (1), political parties,
universities in public law and persons operating a hospital are required to submit
declarations to a regional structural unit of the Tax and Customs Board concerning the
gifts and donations received during a calendar year and concerning the use of such gifts,
donations and other income.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)

(4) An insurer is required to submit a declaration to a regional structural unit of the
Tax and Customs Board concerning the part of insurance premiums the purpose of which
is to pay an insured sum as a pension and which are received from natural persons during
a calendar year under insurance contracts of supplementary funded pen sion which meet
the conditions of § 63 of the Funded Pensions Act.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591; 14.04.2004 entered into
force 01.05.2004 – RT I 2004, 37, 252; 12.10.2005 entered into force 18.11.2005 – RT I
2005, 57, 451)
(5) A management company of a voluntary pension fund established in accordance
with the procedure prescribed in the Funded Pensions Act is required to submit to a
regional structural unit of the Tax and Customs Board a declaration concerning the uni ts
of voluntary pension funds acquired by natural persons during a calendar year, the
amounts paid to acquire these units and the pension fund units redeemed in the course of
changing pension funds.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88 , 591; 12.10.2005 entered into
force 18.11.2005 – RT I 2005, 57, 451)
(5
1) The Social Insurance Board shall submit the names and personal identification
codes of the persons receiving the child support specified in subsection 23
1 (3) as at 1
December and the names and personal identification codes of their children to the Tax
and Customs Board.
(19.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 283)
(5
2) The registrar of the Estonian Central Register of Securities shall submit the
following information concerning resident natural persons who transferred securities
during the period of taxation to the Tax and Customs Board:
1) the given name, surname and personal identification code;
2) name of the issuer of the securities;

3) type and ISIN code of securities;
4) amount of securities;
5) selling price;
6) date of transfer.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(6) The declarations and information specified in subsections (1) –(5
2) shall be
submitted by 1 February of the year following the given calendar year. The declarations
concerning the use of gifts, donations and other income specified in subsection (3) shall
be submitted by 1 July of the year following the given ca lendar year. The format of the
declarations and the procedure for submission of the declarations shall be established by
a regulation of the Minister of Finance.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 31.05.2006 entered into
force 01.01.2007 – RT I 2006, 28, 208)

§ 57
2. Duty to give notice of the interest
(1) A resident legal person, an association of persons or pool of assets established in
Estonia without the status of a legal person (hereinafter association), a non -resident
having a permanent establishment in Estonia, an Estonian state or local government
authority or a sole proprietor (hereinafter the interest payer) who has during a calendar
year paid interest referred to in subsection 17 (1) or subsection (3
2) of this s ection to a
natural person residing in other member state of the European Union, is required to
submit a declaration (hereinafter the interest declaration) concerning the payment of
interests to the Tax and Customs Board. The following information shall be set out in the
interest declaration:
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

1) name, state of residence and address in the state of residence of the recipient of
the interest;
2) number or code used to identify the rec ipient of the interest in the register of
taxable persons of the state of residence, or in case such number or code is not indicated
on the document proving the identity or residency of the person, the date and place of
birth of the recipient of the intere st;
3) data on the residency of the recipient, if the recipient has submitted to the interest
payer a document proving his/her residency.
4) the name or title, address and personal identification code or registry code of the
interest payer;
5) the number of account in an Estonian credit institution where the money, for
which interest is paid, is deposited, or in case other debt obligations, the type of
obligation for which interest is paid;
6) the amount of the interest paid.
(2) The interest payer shall submit the interest declaration also in the case if he/she
has paid interest for the benefit of a natural person residing in another member state of
the European Union to an association founded in the other member state. In that case the
name, country of location and address of the recipient of the payment and the total
amount of the interest paid shall be stated in the interest declaration. An interest
declaration shall not be submitted if the recipient of the payment ce rtifies that:
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
1) the recipient is a legal personality, except for avoin yhtiö or kommandiittiyhtiö
founded in Finland and handelsbolag or kommanditbolag founded in Sweden;
2) the t axation of the recipient’s profit shall be pursuant to the provisions for the
taxation of profit of companies;
3) the recipient is the UCITS within the meaning of § 4 of the Investment Funds
Act.
4) the recipient is deemed to be the UCITS and the corresponding certificate has
been issued by a competent authority of the country of its location.

(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(3) For the purposes of this section, an interest payer is a person, institution or
association who paid the interest directly to the actual beneficiary (hereinafter “the
beneficiary”) If the person who made the payment has a reasonable doubt that the natural
person to who receives the payment is not the actual beneficiary, the person who made
the payment shall take measures to identify the actual beneficiary; If it is impossible to
identify the beneficiary with a reasonable expenditure of time and money, the recipient of
payment shall be considered the beneficiary. The recipient of the payment is not deemed
to be the beneficiary if the recipient proves to meet at least one of the following
conditions:
1) the recipient itself is the interest payer;
2) the recipient is acting in the name of the association or legal person sp ecified in
the first sentence of subsection (2) or clauses (2) 1) -3);
3) the recipient is a representative of the beneficiary and submits the data specified
in clauses (1) 1) and 2) concerning the beneficiary to the interest payer.
(31.05.06 entere d into force 01.01.07 – RT I 2006, 28, 208)
(3
1) If the recipient of the payment is operating in the name of the association
specified in the first sentence of subsection (2), the recipient shall communicate the
name, home country, address and the amount of interest paid to the interest payer and the
interest payer shall set out such data in the interest declaration.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(3
2) In addition to the amounts specified in subsection 17 (1), the foll owing is also
deemed to be interest within the meaning of this section:
1) amounts accrued for the time of repurchase, retrieval or redemption of the debt
obligation;

2) payment made out of interest payments derived from an association spec ified in
subsection (2) 3) or 4) or directly from an investment fund established in a third country,
or through the association specified in the first sentence of subsection (2);
3) payment derived from the repurchase, retrieval or redemption of shares in an
association specified in clauses (2) 3) or 4) or an investment fund established in a third
country if, at the time of transfer of the participating interest in the assets such association
or investment fund, more than 40 per cent has been invest ed in debt obligations either
directly or through an association specified in clauses (2) 3) or 4) or an investment fund
established in a third country.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(3
3) The rate specified in (3 2) shall be determined on the basis on the fund rules or
articles of association of the fund or if this is not possible, based on the actual
composition of the assets. If the interest payer possesses no such information, the rate
shall be presumed to be 40 per cent .
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(4) The interest payer shall verify the data referred to in subsection 1 on the basis of
valid identity document issued by a foreign state and, where appropriate, on the basis of
document proving the residency. If the document does not bear any information about the
address of the recipient of interest in the state of residence, it will be ascertained on the
basis of other data available to the interest payer. The state of residence of the recipient of
interest shall be the state of issuance of the identity document or a territory with an
independent tax jurisdiction in a foreign state, except in case the person presents a
document proving the residency of any other state or territory.
(5) The interest declaration shall be submitted by 10 April of the year following the
year of payment of the interest. The format of the declarations and the procedure for
completing the forms shall be established by a regulation of the Minister of Financ e.
(6) The Tax and Customs Board shall send the information submitted by interest
declarations to the tax authority of the recipient’s country of residence, or if this is not

known, to the recipient’s state of residence or the country of location of the association
specified in subsection (2) by 30 June of the year following the year of payment of the
interest.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(7) Subsections (1) -(6) also apply to interest paid to a natural person resi ding within a
territory with an independent tax jurisdiction of a member state or to an association
specified in subsection (2) established within such territory if an agreement on exchange
of information on interests between such territory and Estonia so prescribes. The
agreements for the exchange of information on interests shall be published on the website
of the Tax and Customs Board.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(8) A person specified in subsection (1) who, within a calendar year, has paid interest
to a non- resident not specified in subsections (1) and (2), is required to submit a
declaration to the Tax and Customs Board by 10 April of the year following the year of
payment of the interest. The format of the declarat ion and the procedure for completing
the form shall be established by a regulation of the Minister of Finance.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)

Chapter 12
Implementing Provisions

§ 58. Taxation of income of year 1999
(1) The income of all taxpayers derived during the year 1999 shall be declared and
subject to taxation, and income tax shall be paid and refunded, pursuant to the provisions

of the Income Tax Act (RT I 1993, 79, 1184; 1998, 9, 111; 28, 353 and 354; 34, 485 and
489; 40, 612; 51, 757; 61, 979; 103, 1699; 1999, 4, 51; 10, 150; 16, 270 and 273; 27, 383
and 393; 101, 902) which was in force before the entry into force of this Act.
(2) In the case of a resident legal person or a branch of a foreign company wh ose
financial year does not coincide with the calendar year, the part of the financial year
preceding the date of entry into force of this Act is deemed to be an independent period
of taxation for which an income tax return shall be submitted and income ta x paid
pursuant to the provisions of subsection (1). The percentage rates prescribed in
subsection 17 (4) and subsection 20 (1) of the Income Tax Act in force before the entry
into force of this Act are applied in proportion to the number of months in the period of
taxation.
(3) Income tax which is calculated on the basis of the Act in force before the entry
into force of this Act and which is received by the Tax and Customs Board after the entry
into force of this Act is transferred by the Tax and Customs Board to state and local
budgets pursuant to § 8 of the Income Tax Act in force before the entry into force of this
Act.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 591)
(4) A taxpayer who is a natural person and who owns fixed a ssets on which he or she
has calculated depreciation on the basis of § 17 of the Income Tax Act in force before the
entry into force of this Act may deduct the adjusted cost of the fixed assets from the
business income of the year 2000. If the acquisition cost of the fixed assets has not been
paid in full, the amount deducted from income shall not exceed the amount paid for the
fixed assets. The adjusted cost of each fixed asset shall be calculated pursuant to
subsection 59 (1).
(14.06.2000 entered into for ce 01.01.2001 – RT I 2000, 58, 377)

§ 59. Calculation of income tax upon transfer of fixed assets
(1) A taxpayer who is a natural person and owns fixed assets on which he or she has
calculated depreciation on the basis of § 17 of the Income Tax Act in force before the
entry into force of this Act shall calculate the gain or loss (§ 37) from the transfer of such
fixed assets on the basis of the adjusted cost of the fixed assets. The adjusted cost is
deemed to be the value of fixed assets carried over to the next period of taxation, as stated
in the tax depreciation table of the tax return prepared for the period of taxation which
ended by the date of entry into force of this Act. In the case of fixed assets classified
under Depreciation Group II, the adjusted cost of each fixed asset is calculated
proportionally according to the ratio of the acquisition cost of the corresponding fixed
asset to the total acquisition cost of all fixed assets classified under Depreciation Group
II.
(2) If a taxpayer who is a natural person has made deductions from taxable income on
the basis of subsection 18
1 (1) of the Income Tax Act in force before the entry into force
of this Act, the provisions of subsection 18
1 (4) of the Income Tax Act in force before the
entry into force of this Act are applied to the transfer or taking into personal use
(subsections 37 (4) and (5)) of such fixed assets within two years after their acquisition,
improvement or supplementation. The amount of the deductions made from taxable
incom e is added to business income derived during the period of taxation in which the
fixed assets were transferred or taken into personal use.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(3) If a taxpayer has, in addition to the acquisition cost of fixed assets, also deducted
the depreciation of the fixed assets on the basis of § 17 of the Income Tax Act in force
before the entry into force of this Act from the taxable income of the taxpayer, the
provisions of subsections 37 (3), (4) or (5) are applied to the transfer or taking into
personal use of such fixed assets in addition to the provisions of subsection (2).
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)

(4) If a resident legal person or a non -resident spe cified in subsection 6 (4) has made
deductions from taxable income on the basis of subsection 18
1 (1) of the Income Tax Act
in force before the entry into force of this Act, and if the resident legal person or non-
resident transfers such fixed assets withi n two years after their acquisition, improvement
or supplementation, the taxpayer is required to pay income tax in the amount of 26 per
cent of the acquisition, improvement or supplementation costs of the transferred fixed
asset, which the taxpayer had ded ucted from taxable income during an earlier period of
taxation. If the taxpayer has deductions which can be carried forward on the basis of
subsection 21 (1
1) of the Income Tax Act in force before the entry into force of this Act,
the taxpayer may reduce t he amount subject to income tax in accordance with this
subsection by the deductions to be carried forward. The balance of deductions to be
carried forward on the basis of subsection 21 (1
1) of the Income Tax Act in force before
the entry into force of thi s Act is also reduced by the total amount of the deductions
specified in the previous sentence.
(5) Income tax specified in subsection (4) shall be declared in an income tax return
specified in subsection 54 (2) during the calendar month in which the fixed assets were
transferred. Income tax shall be paid by the due date specified in subsection 54 (4).

§ 60. Specifications for taxation of dividends
(1) A company, the income tax paid by whom pursuant to subsection 32 (2) of the
Income Tax Act i n force before the entry into force of this Act has not been fully
deducted on the basis of an income tax return submitted with regard to the last period of
taxation which ended before the entry into force of this Act from the income tax payable
on the bas is of the same Act, may deduct the overpaid amount of income tax from the
income tax payable on the basis of subsection 50 (1) or (2). If the overpaid amount of
income tax exceeds the income tax payable during a period of taxation on the basis of
subsectio n 50 (1) or (2), the remaining part of the overpaid amount, which has been

reduced on the basis of the right of deduction transferred to another resident company
pursuant to subsection (3), may be carried forward to subsequent periods of taxation.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(2) If a resident company pays dividends from the net profit of financial years which
ended during the years 1994–1999, the company may deduct the part of income tax paid
during the years 1994 -1999 on the part of the profit which corresponds to the dividends
from income tax payable on the basis of subsection 50 (1), but not more than by the
amount of income tax payable during the period of taxation on the basis of subsection 50
(1). The income ta x deductible is determined such that the total amount of income tax of
the company, calculated on taxable income and adjusted by incentives in the income tax
returns submitted for the periods of taxation of the years 1994- 1999, is divided by the
total amou nt of the lines “net profit of the accounting year” in the balance sheets of the
company’s annual reports of the years 1994 -1999, from which the size of bonus issues
carried out in the years 1994- 1999 on account of the net profit of the same years is
deduc ted, and the resulting amount is multiplied by the amount of the dividends paid.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(3) (Repealed – 24.10.2001 entered into force 01.01.2003 – RT I 2001, 91, 544)
(4) (Repealed – 24.10.2001 entered into force 01.01.2003 – RT I 2001, 91, 544)
(5) (Repealed – 24.10.2001 entered into force 01.01.2003 – RT I 2001, 91, 544)
(6) A company to which the right to deduct income tax provided for in subsections
(1) and (2) has been tr ansferred by another resident company before 1 January 2003 may,
in addition to the income tax specified in subsection (2), also deduct the transferred
income tax from the income tax payable pursuant to subsection 50 (1), but the deduction
is limited to th e total amount of income tax payable pursuant to subsection 50 (1) during
the period of taxation. The remaining amount of transferred income tax resulting from

such deduction may be deducted from the income tax payable pursuant to subsection 50
(1) during subsequent periods of taxation.
(24.10.2001 entered into force 01.01. 2003 – RT I 2001, 91, 544)
(7) (Repealed – 24.10.2001 entered into force 01.01.2003 – RT I 2001, 91, 544)
(8) Income tax prescribed in subsection 50 (1) is not charged on dividends paid on a
dividend account opened on the basis of subsection 32 (4) of the Income Tax in force
before the entry into force of this Act.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)

§ 61. Other implementing provisions
(1) C ompanies whose income is fully or partly exempt from income tax on the basis
of § 17 of the Republic of Estonia Corporation Tax Act (RT 1991, 36, 446; 1992, 34,
442; 1993, 6, 95; RT I 1993, 79, 1184) shall pay income tax on objects of taxation
prescribed i n §§ 48-52.
(2) The provisions of § 35 also apply to expenses carried forward on the basis of § 21
of the Income Tax Act in force before the entry into force of this Act. Expenses
prescribed in subsection 21 (1
1) of the Income Tax Act in force before the entry into force
of this Act may be carried forward to up to seven subsequent periods of taxation.
(3) The loss carried forward on the basis of § 22 of the Income Tax Act in force
before the entry into force of this Act may be deducted pursuant to § 39 from the gains
derived from the sale of the taxpayer’s property.
(4) The provisions of subsection 34 (1) also apply to income tax payable under the
Income Tax Act in force before the entry into force of this Act.

(5) Employers shall withhold income tax pursuant to clause 41 (1) of this Act on
medical insurance benefits payable by employers until 1 July 2000 on the basis of
subsection 5 (3) of the Republic of Estonia Health Insurance Act, Republic of Estonia
Employment Contracts Act, Public Service Act and State Fees Act Amendment Act (RT I
1998, 111, 1829; 113/114, 1876).
(6) Subsection 54 (5) applies to income tax withheld or paid abroad after the entry
into force of this Act. Income tax withheld or paid abroad before the entry int o force of
this Act shall be deducted from the income tax payable by the taxpayer in Estonia,
pursuant to § 30 of the Income Tax Act in force before the entry into force of this Act.
(14.06.2000 entered into force 01.01.2001 – RT I 2000, 58, 377)
(7) Amounts paid on the basis of a life insurance contract with an investment risk
entered into before 1 January 2001 are subject to taxation on the basis of subsection 20
(3) if the amounts are received within five years as of the insurance contract being
en tered into.
(06.12.2000 entered into force 01.01.2001 – RT I 2000, 102, 667)
(8) (Repealed – 20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)
(9) The income tax rate provided for in the subsection 4 (1) of this Act is applicable
t o payments made by an insurer on the basis of an insurance contract for a supplementary
funded pension entered into before 1 May 2002, taking into account the specifications
provided for in subsections (10) –(12).
(20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)
(10) The income tax rate of 10 per cent is applicable to payments made by an insurer to
a policy holder on the basis of an insurance contract for a supplementary funded pension
entered into before 1 May 2002, after the policy holde r has attained 55 years of age or
becomes totally and permanently incapacitated for work or upon the liquidation of the
insurer.

(20.02.2002 entered into force 01.03.2002 – RT I 2002, 23, 131)
(11) Income tax is not charged on a pension paid to a polic y holder periodically under
an insurance contract for a supplementary funded pension entered into before 1 May
2002, after the policy holder has attained 55 years of age or after his or her permanent
and total incapacity for work has been verified and on t he condition that the insurance
contract prescribes that corresponding payments are made in equal or increasing amounts
at least once every three months until the death of the policy holder.
(20.02.2002 entered into force 01.03.2002 – RT I 2002, 23, 131)
( 12) The income tax rate provided for in the subsection 4 (1) of this Act is applicable
to insurance indemnities paid in the event of death on the basis of an insurance contract
for a supplementary funded pension entered into before 1 May 2002, regardle ss of the
provisions of subsection 20 (5) and 21 (5).
(20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)
(13) Payments made by a voluntary pension fund to a unit -holder after the unit -holder
has attained 55 years of age or becomes totally and permanently incapacitated for work or
upon the liquidation of the pension fund are also subject to the income tax rate of 10 per
cent before five years have passed since the initial acquisition of units if the units of the
fund are initially acquired before 1 May 2002.
(20.02.2002 entered into force 01.03.2002 – RT I 2002, 23, 131)
(13
1) Payments made by a voluntary pension fund to a unit -holder has attained 55 years
of age are also subject to the income tax rate of 10 per cent before five years have passed
since the acquisition of units which are redeemed, if the first acquisition of units of the
fund has taken place before May 1, 2004 and at least five years since the first acquisition
have passed.
(20.04.2005 entered into force 01.07.2005 – RT I 20 05, 25, 193)

(14) If an insurance contract for a supplementary funded pension is entered into before
1 May 2002, a resident natural person may, in addition to that provided for in clause 28
(1) 1), deduct from his or her income received during a period of taxation such part of the
insurance premiums as are paid during the period of taxation on the basis of the contract
in order to ensure payment of the insured sum as an indemnity in the event of death.
(20.02.2002 entered into force 01.03.2002 – RT I 20 02, 23, 131)
(15) The right to deduct specified in subsection (14) shall apply to the corresponding
parts of the insurance premiums paid after 1 January 2001.
(15.05.2002 entered into force 07.06.2002 – RT I 2002, 44, 284)
(16) Subsection 28 (1
1) does not apply to contracts for a supplementary funded pension
entered into before 1 May 2002.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)
(17) The provisions of subsection 11 (2) apply to a legal person entered in the Estonian
regi ster of churches, congregations and associations of congregations until entry of the
legal person in the register of religious associations or until compulsory dissolution of the
person pursuant to the provisions of the Churches and Congregations Act.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)
(18) A taxpayer shall submit the application specified in subsection 42 (1) by 31 March
2003 unless the taxpayer has already submitted the application.
(11.12.2002 entered into force 01.01.2003 – RT I 2002, 111, 662)
(19) The tax rate specified in subsection 4 (1) applies to income tax payable for the
corresponding period of taxation.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)

(20) Pursuant to the procedure provide d for in § 25, a resident natural person has the
right to deduct from his or her income any interest paid on a housing loan or lease to a
financial institution which is resident in Estonia and does not belong to the same group as
a credit institution if th e contract is entered into before the date of Estonia’s accession to
the European Union. A resident natural person may also deduct from his or her income
any interest on a loan or lease taken in order to acquire housing for his or her spouse,
parents or ch ildren if the contract is entered into before 1 January 2005.
(17.12.2003 entered into force 01.05.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2005 – RT I 2003, 88, 587)
(21) In addition to the provisions of subsection 31 (3), income tax is not charged on
any interest paid to a non -resident financial institution if all the following conditions are
met:
1) according to the legislation of its home country, the recipient of the interest
qualifies as an institution corresponding t o an Estonian financial institution;
2) the income tax rate applicable to interest in the country of residence of the
recipient of the interest is not lower than two -thirds of the Estonian income tax rate
applicable to interest;
3) interest is paid on loans taken and securities issued before 1 January 2004.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(22) Persons entered in the register of trade unions shall submit first declarations to a
regional structural unit of t he Tax and Customs Board concerning the entrance and
membership fees paid by natural persons by 1 February 2005.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587; 17.12.2003 entered into
force 01.01.2004 – RT I 2003, 88, 591; 12.10.2005 enter ed into force 18.11.2005 – RT I
2005, 57, 451)

(23) Any additional amounts due determined on the basis of the income tax returns of
resident natural persons submitted concerning income received in 2003 shall be received
by the state and overpaid amount s of tax shall be returned out of that part of income tax
which is received by the state.
(17.12.2003 entered into force 01.01.2004 – RT I 2003, 88, 587)
(24) If the contractual relationship has started before 1 January 2004, the information
concerning the recipient of interest provided in subsection 57
2 (1) may be limited to the
name, state of residence and address in the state of residence of the recipient of interest.
The information is verified on the basis of data available to the interest payer.
( 20.05.2004 entered into force 27.05.2004 – RT I 2004, 45, 319)
(25) Pursuant to subsection 50 (1) or (2) or subsection 53 (4), the amount of income
tax to be deducted pursuant to subsection 54 (5) shall not exceed the amount which forms
21/79 of the am ount of the payment made by the non- resident correspondingly to the date
on which the tax liability arises.
(26.11.2009 entered into force 01.01.2010 – RT I 2009, 59, 391)
(26) Subsections 50 (1
1), 53 (4 1) and 54 (5) are applicable to the payments made on
account of dividends received since January 1, 2005.
(20.04.2005 entered into force 01.07.2005 – RT I 2005, 25, 193)
(27) If resident company or a non- resident through its permanent establishment
registered in Estonia has received dividends from re sident company before January 1,
2000 or in the year 2003 or 2004, and the recipient of the dividends owns, at the time of
payment of the dividends, at least 20 per cent of the shares or votes of the payer of the
dividends, the recipient of the dividends m ay deduct from the income tax payable
pursuant to subsection 50 (1) or (2) or 53 (4) an amount that forms 21/79 of the dividends
received from resident company, correspondingly to the date on which the tax liability
arises pursuant to subsection 50 (1) or (2) or 53 (4).
(26.11.2009 entered into force 01.01.2010 – RT I 2009, 59, 391)

(28) If a resident company or a non -resident through its permanent establishment
registered in Estonia has received dividends from a non- resident company before January
1, 2005, the recipient of dividends may deduct the income tax withheld from such
dividends abroad from the income tax payable on the basis of subsection 50 (1) or (2) or
53 (4). If the resident company who has received dividends owns, at the time of payment
of the dividends, at least 20 per cent of the shares or votes of the non- resident company
which paid the dividends, the recipient of the dividends may deduct also the income tax
paid on the share of profit abroad which was the basis for the dividends in addi tion to the
income tax withheld from the dividends from the income tax payable on the basis of
subsection 50 (1) or (2) or 53 (4). On the basis of subsection 50 (1) or (2) or 53 (4), the
amount of income tax to be deducted pursuant to this subsection shall not exceed 21/79
of the amount of the dividends paid by the non -resident correspondingly to the date on
which the tax liability arises. The income tax of a foreign state may be deducted only in
the amount which it is mandatory to pay pursuant to the law of the state or an
international agreement. Income tax paid in each state shall be recorded separately.
(26.11.2009 entered into force 01.01.2010 – RT I 2009, 59, 391)
(29) If by 1 July 2007, a non- profit association or foundation entered in the list does no
conform to the requirements for entry in the list of non- profit associations and
foundations benefiting from income tax incentives provided by subsection 11 (2) or if the
circumstances specified in subsections 11 (4) or (7) become evident, such association or
foundation shall be deleted from the list as of 1 July 2008.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(30) Notwithstanding the provisions of clause 34 12), a sole proprietor has the right to
deduct the social insurance con tributions and payments paid for the period of taxation
preceding the period of taxation of the year 2007 from the business income thereof.
Contributions from business income made to a mandatory funded pension by a sole
proprietor on the basis of subsecti on 11 (2) of the Funded Pensions Act are not subject to
deduction from business income.

(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(31) Clause 13 (3) 8), subsection 17 (2), subsections 21 (2), (3) and (4), § , subsection
25 (1), subsec tion 26 (3), clauses 28 (1) 1) and 2), subsection 31 (4), subsection 44 (2),
subsection 45 (8), subsection 49 (1) and subsection 51 (4) retroactively apply as of 1
January 2006.
(31.05.06 entered into force 01.01.07 – RT I 2006, 28, 208)
(32) Subsectio n 50 (2
1) and 53 (4 7) apply to payments specified in these subsections
which have been received as of 1 January 2009.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(33) Subsection 50 (1
1) or 53 (4 1) and subsections 54 (5) -(5 4) of the Income Tax Act in
force until 1 January 2009 apply to income received by a resident company or a non-
resident through a permanent establishment registered in Estonia before the specified
date.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(34) If a resident company has carried out a bonus issue before 2000:
1) tax is charged on the portion of the payments specified in subsection 50 (2) which
exceed the amount of the monetary and non- monetary contributions paid into the own
capi tal of the company and of the profit used for the bonus issue before 2000;
2) tax is charged on the part of the own capital of the company provided for in
subsection 50 (2
2) which exceeds the amount of the monetary and non -monetary
contributions pa id into own capital and of the profit used for the bonus issue before 2000.
(20.11.2008 entered into force 01.01.2009 – RT I 2008, 51, 286)
(35) The provisions of this Act regarding sole proprietors entered in the commercial
register also apply to sole proprietors registered in a regional structural unit of the Tax

and Customs Board during the period of re-registration from 1 January 2009 until
deletion of the sole proprietor from the register of taxable persons.
(11.12.2008 entered into force 01.01.2009 – RT I 2008, 60, 331)
(36) Subsections 57
1 (2) and (3) which were in force until 31 December 2009 apply
upon submission of returns concerning student loan interest and trade union entrance and
membership fees paid during the year 2009.
(29.10.2009 entered into force 01.01.2010 – RT I 2009, 54, 362)

§ 62. Entry into force of Act
This Act enters into force on 1 January 2000.

Chapter 13
Amendment of Legislation Currently in Force

§ 63. Amendment of Local Taxes Act
Clause 5 2) and § 7 of the Local Taxes Act (RT I 1994, 68, 1169; 1996, 49, 953; 1999,
16, 269; 101, 903; 2000, 33, 196; 81, 515; 2001, 11, 49; 2002, 44, 284; 110, 654; 2003,
88, 591; 2004, 45, 319) are repealed.

§ 64. Amendment of Accounting Act

The Accounting Act (RT I 1994, 48, 790; 1995, 26–28, 355; 92, 1604; 1996, 40, 773; 42,
811; 49, 953; 1998, 59, 941; 1999, 55, 584; 101, 903; 2001, 87, 527; 2002, 23, 131) is
amended as follows:
1) subsection 2 (1) is amended and worded as follows:
“(1) Subject to the specifications p rescribed in subsections (2)–(8) of this section, this
Act extends to all legal persons in private law and sole proprietors registered in Estonia,
to foreign legal persons who have a registered branch or other permanent establishment
in Estonia and to lega l persons in public law founded in Estonia (hereinafter accounting
entities), with the exception of the Bank of Estonia. The procedure for accounting and
reporting for taxation purposes is established by other legislation.”;
2) In subsection 2 (10) , the words “branch of a foreign company” are substituted by
the words “foreign legal person who is required to maintain accounting”.

§ 65. Amendment of Social Tax Act
The Social Tax Act (RT I 1998, 40, 611; 61, 982; 113/114, 1875 and 1876; 1999, 29,
397; 71, 685; 82, 749; 87, 789; 88, 806; 97, 857; 591) is amended as follows:
1) the following text is omitted from clause 2 (1) 4): “(RT I 1993, 79, 1184; 1998, 9,
111; 28, 353 and 354; 34, 485 and 489; 40, 612; 51, 757; 61, 979; 103, 1699; 1999, 4, 51;
10, 150; 16, 270 and 273)”;
2) clause 2 (1) 8) is amended and worded as follows:
“8) on fringe benefits within the meaning of the Income Tax Act, expressed in
monetary terms, and on income tax payable on fringe benefits;”;
3) clau se 6 (1) 4) is amended and worded as follows:

“4) disabled persons employed working in a company, non -profit association or
foundation included in a list established by the Minister of Social Affairs, and”;
4) in subsection 6 (2), the words “ manufacturing enterprise of an association of
disabled persons” are substituted by the words “company, non -profit association or
foundation specified in clause (1) 4) of this section”;
5) in clauses 10 (1) 4) and 5), the words “by the fifth” are substituted by the words
“by the tenth”;
6) subsection (5
1) is added to § 10 worded as follows:
“(5
1) The social tax of employees of such authorities whose staff, consolidated data or
specific duties constitute a state secret shall be calculated p ursuant to the procedure
established by a regulation of the Minister of Finance.

§ 66. Amendment of Value Added Tax Act
In subsection 5 (4) of the Value Added Tax Act (RT I 1993, 60, 847; 1996, 63, 1149; 76,
1344; 81, 1447; 1997, 11, 96; 40, 621; 42, 679; 48, 773 and 776; 72, 1187; 74, 1231 and
1232; 1998, 23, 321; 57, 863; 86/87, 1410; 103, 1702; 1999, 18, 302; 27, 392; 52, 558;
92, 823), the words “and non- profit associations and foundations registered in Estonia
and included in the list approved by the Government of the Republic on the basis of
clause 5 (1) 2
1 of the Income Tax Act (RT I 1993, 79, 1184; 1998, 9, 111; 28, 353 and
354; 34, 485 and 489; 40, 612; 51, 757; 61, 979; 103, 1699; 1999, 4, 51; 10, 150; 16, 270
and 273; 27, 383 and 393)” are subst ituted by the words “, or non-profit associations or
foundations benefiting from income tax incentives entered in the corresponding list approved
by the Government of the Republic on the basis of the Income Tax Act, or legal persons
entered in the Estonian register of churches, congregations and associations of congregations
“.

§ 67. Repeal of Income Tax Act
The Income Tax Act (RT I 1993, 79, 1184; 1998, 9, 111; 28, 353 and 354; 34, 485 and
489; 40, 612; 51, 757; 61, 979; 103, 1699; 1999, 4, 51; 10, 150; 16, 270 and 273; 27, 383
and 393; 101, 902) is repealed.

1 Council Directive 90/434/EEC on the common system of taxation applicable to
mergers, divisions, transfers of assets and exchanges of shares concerning companies of
different Member Stat es (OJ L 225, 20.08.1990, pp 1–5), last amended by Council
Directive 2005/19/EC (OJ L 058, 04.03.2005, pp 19–27);
Council Directive 90/435/EEC on the common system of taxation applicable in the case
of parent companies and subsidiaries of different Member States (OJ L 225, 20.08.1990,
pp 6–9), last amended by Council Directive 2003/123/EC (OJ L 007, 13.01.2004, pp 41–
44);
Council Directive 2003/48/EC on taxation of savings income in the form of interest
payments (OJ L 157, 26.06.2003, pp 38–48), last amen ded by Council Directive
2004/587/EC (OJ L 257, 04.08.2004, p 7);
Council Directive 2003/49/EC on a common system of taxation applicable to interest and
royalty payments made between associated companies of different Member States (OJ L
157, 26.06.2003, pp 49–54), last amended by Council Directive 2004/76/EC (OJ L 157,
30.04.2004, pp 106–113).
(31.05.2006 entered into force 01.01.2007 – RT I 2006, 28, 208)
2 RT = Riigi Teataja = State Gazette
3 Riigikogu = the parliament of Estonia