Submission of declaration form TSD

Declaration of income and social tax, unemployment insurance premiums and contributions to mandatory funded pension (form TSD) is submitted by the 10th day of the month following the month the payment was made. The declaration includes a summary form and annexes.

Possibilities for submitting the declaration

  • The declaration can be submitted in the e-MTA by either entering data manually or uploading as a file. 
    The declaration may be uploaded as an XML file, in a single file or separately by annexes. In addition, annexes 1 and 2 and the INF1 form can also be imported from a CSV file after the declaration has been formed. 

    submit declaration

  • The declaration can also be submitted via X-tee.

  • The form TSD can be submitted on paper only if there are up to five rows, i.e. five or less recipients to be declared.

Instructions for submitting the declaration

5. Non-resident receives remuneration paid for ...

5. Non-resident receives remuneration paid for providing services on the basis of a contract under the law of obligations

A person providing services according to a contract under the law of obligations receives a remuneration in the amount of 1200 euros (code 123). This person’s income is subject to tax exemption arising from a convention for the avoidance of double taxation with respect to income tax concluded between Estonia and another country. 

Diana is a German tax resident who is paid 1200 euros (gross amount) for services provided in the territory of Estonia on the basis of a contract under the law of obligations. Diana is in Estonia for a short time.

As Estonia and Germany have concluded a convention for the avoidance of double taxation with respect to income tax (tax treaty), according to which (article 14) such income for services in Estonia will not be taxable in Estonia, unless a fixed base is regularly available to the service provider in Estonia. 

Valid data of a certificate of the German tax residency confirmed by the German tax authorities is entered in the database of the Estonian Tax and Customs Board. Thus, the tax exemption arising from the tax treaty is applied (tax rate 0% is indicated in code 2160 and the amount of withheld income tax in code 2170 is also 0). 

As Germany is a Member State of the EU, and there is a valid certificate of Diana´s tax residency confirmed by the German tax authorities submitted to the Estonian Tax and Customs Board, the Estonian employer may apply the basic exemption as prescribed in the Estonian Income Tax Act when calculating the Estonian income tax to be withheld on the payment.
However, since the payment is already subject to tax exemption under the tax treaty, there is no need to apply the basic exemption under Estonian law in codes 2154 and 2155.

Diana is therefore not required to submit an application for applying the Estonian basic exemption, as the payment is already exempt from tax due to the tax treaty.

Diana has an A1 form certifying the social security of Germany, i.e. social tax and unemployment insurance premiums are also not paid in Estonia. In this case, the payment type is 124. 

If the person has both the certificate of tax residency and form A1 and if there is no actual tax liability on the payment in Estonia, the payer must still declare the income of a German resident in Annex 2 to the form TSD.

If the payment recipient has been registered as a sole proprietor in Estonia or another Member Country of the European Economic Area (Member State of the EU, Iceland, Liechtenstein or Norway; Germany in the example) and if there is an A1 form, then the payer is exempted from declaring the payment in annex 2 of the form TSD. The recipient declares the possible tax obligation in Estonia. Thus, if Diana is registered as a sole proprietor in Germany, Diana will declare the possible Estonian tax liability herself.
 

TAX CALCULATION
  • Withheld income tax 1200 x 0 =  0 euros

Net payment of 1200 euros (1200–0) is made to Diana´s bank account.

DECLARATION IN ANNEX 2 OF FORM TSD

Payment recipient

Payment

A1/E101 country

personal ID code in Estonia

name or first name and surname

country

type

amount

2000

2010

2020

2030

2040

2060

55577899900

Diana

DE

124

1200

Germany

Amount subject to income tax

Tax exemption

Income tax rate

Amount of income tax withheld

type

amount

2150

2154

2155

2160

2170

1200

0

0

TAX CALCULATION WITHOUT A VALID CERTIFICATE OF TAX RESIDENCY

If the recipient of the payment does not have a valid certificate of tax residency, it is not allowed to apply:

  • tax exemptions arising from the tax treaty (income tax rate is 20% in code 2160)

  • the basic exemption according to the Estonian Income Tax Act (in codes 2154 and 2155).

Withheld income tax is 1200 x 20% = 240 euros.

Form A1 certifying social insurance in Germany is submitted.

Net payment of 960 euros (1200–240) is made to Diana´s bank account.

DECLARATION IN ANNEX 2 OF FORM TSD

Payment recipient

Payment

A1/E101 country

personal ID code in Estonia

name or first name and surname

country

type

amount

2000

2010

2020

2030

2040

2060

55577899900

Diana

DE

124

1200

Germany

Amount subject to income tax

Tax exemption

Income tax rate

Amount of income tax withheld

type

amount

2150

2154

2155

2160

2170

1200

20

960

Last updated: 25.02.2022

Last updated: 19.08.2022

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