The following applies to payment of tax liabilities in instalments:
- As of 1 July 2022, the amendment to subsection 11 of § 111 of the Taxation Act entered into force, as a result of which it is no longer possible to pay mandatory funded pension contributions in instalments. Mandatory funded pension contributions must be paid before applying for payment of tax arrears in instalments. Please use the reference number of the prepayment account when making the payment;
- tax arrears subject to payment in instalments can be paid prematurely;
- it is not possible to apply a grace period;
- if an instalment payment falls on the weekend, the instalment must be paid on the preceding working day;
- pursuant to law, tax liabilities under a schedule of instalments are subject to disclosure, however, you are entitled to a certificate concerning the absence of tax arrears.
Application process in the e-MTA
The fastest way to set up a schedule of instalments is to apply through the Estonian Tax and Customs Board online services environment e-MTA.
You can apply for payment of tax liabilities in instalments in the e-MTA if:
- there are no prior applications under processing at the same time;
- the company has tax arrears;
- the company has future tax liabilities that can be paid in instalments;
- the company already has a current schedule of instalments but you wish to pay ongoing liabilities in instalments.
You can submit an application for payment in instalments for a period of 2 to 24 months. In addition, it is also possible to apply for a schedule with irregular payments. Please note that the amount of the last instalment may not exceed 50% of the total debt covered by the schedule.
If for some reason you cannot submit your application through the e-MTA, it is still possible to send the application for payment of tax liabilities in instalments on a paper form to the Estonian Tax and Customs Board.
You can submit the application in the following ways:
- by e-mail (digitally signed) to the address email@example.com;
- by post to the address: Lõõtsa 8a, 15176 Tallinn;
- at a service bureau.
We prefer the use of e-MTA for submitting applications for payment of tax liabilities in instalments because this ensures that the application reaches the processing official in the fastest way.
The application you submit is processed under the simplified procedure and the decision with the accompanying interest claim are generated automatically by the data processing system in the following events:
- tax liabilities are within the range of 50 - 20,000 euros;
- the requested duration of the schedule is up to 12 months;
- all mandatory tax returns have been filed;
- there are no current scheduled payments of tax liabilities in instalments or court-approved compromise schedules;
- the company does not have unpaid mandatory funded pension contributions for which the due date has expired;
- the company has neither unpaid fines nor penalty payments imposed by the Estonian Tax and Customs Board and there are no overdue public claims (fine, penalty payment, pecuniary punishment, procedure expenses) arisen as the result of judicial proceedings;
- no bankruptcy, liquidation or restructuring proceedings have been initiated against the company;
- there is no joint and several liability (i.e. tax arrears subject to payment by multiple persons on a joint and several basis);
- there is no tax liability that is subject to dispute;
- tax arrears have not been handed over to the bailiff for compulsory execution;
- there are no instalment schedules which have been declared invalid within the last six months.
An automatic decision will be generated on the basis of the data submitted by you in the application. There will be an automatic interest claim added to such decision, which will be created on the calculated interest as per your tax assessment as of the date that the decision is approved. Payment of such interest is included in the confirmed payment schedule and is not subject to payment separately outside of the schedule.
Both automatically generated documents will be immediately issued to you in the e-MTA (select Communication - Documents). The documents will bear a digital stamp.
If the application you submitted does not meet the conditions of the simplified procedure as provided above, your request will be processed by the tax authority pursuant to the normal procedure provided for in the Taxation Act. In such cases, the tax authority makes a decision to accept or deny the application for payment of tax liabilities in instalments within 20 days as of receipt of such application.
Upon deciding on an application we take into consideration:
- your prior performance of payment obligations, including whether you have filed your tax returns on a timely basis, the duration of the tax arrears, etc.;
- financial situation of the company;
- business performance indicators of the company;
- the viability of being able to meet the schedule of payments and new payment obligations;
- if security is required, then the reliability and adequacy of the security provided.
The following documents must be attached to the application:
- balance sheet as of the end of the month prior to submission of the application;
- income statement;
- annual report as of the end of the previous calendar year, if you have not submitted it to the Commercial Register.
In certain cases we might ask for a security to ensure the payment of tax liabilities. We prefer registered security over movables or mortgage. In order to mortgage a registered immovable property, you need to provide an expert appraisal that cannot be older than three months.
Delivery of documents related to instalments:
- If your application for payment by instalments is submitted via the e-MTA, your decision will be delivered via e-MTAs (Communication - Documents) and we will send you a notification about the document being issued via email or text message.
- Procedural documents are deemed to be delivered to you at the time of making them available in the e-MTA.
- If only your postal address is known to the tax authority, the documents will be sent by post and the delivery of documents is conducted pursuant to the procedure provided for in Taxation Act, Chapter 4. Further information is available on the ETCB website about the delivery of documents.
Until full payment of tax arrears, the arrears are subject to a daily interest rate of 0.06 % (i.e. 21.9 % per year).
In the case of paying tax arrears in instalments, it is possible to apply for an interest rate reduction of up to 50 % as of the decision to satisfy the request for the payment of tax arrears in instalments. The request must be indicated in the application. The interest accrued up to the decision is not subject to this interest reduction.
If the application for payment in instalments meets the conditions for payment in instalments under simplified procedure, you will automatically receive an interest rate reduction of 50 %.
The Estonian Tax and Customs Board has the right to deny an application for payment of tax liabilities in instalments in the following cases:
- the necessity for payment in instalments is not sufficiently justified;the company has been instr
- ucted to pay the tax arrears within 48 hours;
- you do not keep accounts in accordance with the legislation (e.g. have not filed annual reports) and have not filed tax returns;
- you have failed to post adequate or reliable security by an assigned deadline;
- other reasons arise that render the payment of tax liabilities in instalments unproductive, for example the reason that in reality you are able to meet your obligations without a schedule of instalments.
The Estonian Tax and Customs Board has the right to revoke the decision for implementing payment in instalments and the reduction in interest rate in the following cases:
- you fail to comply with the approved schedule;
- you fail to pay your ongoing taxes on a timely basis during the period that the schedule of instalments is in place;
- you fail to file mandatory tax returns on a timely basis;
- you fail to comply with the obligation stipulated by the Law of Property Act of safe-keeping of pledged thing or;
- you fail to post replacement security that is acceptable to the tax authority in case of a reduction in value of the security.
After the decision for implementing payment in instalments is revoked, we have the right to begin compulsory enforcement with respect to the tax arrears pursuant to the provisions of Taxation Act, Chapter 13.
Last updated: 01.07.2022