Obligation of non-resident to file income tax return in Estonia
Non-residents have to file an income tax return if they received in Estonia:
- gains from the transfer of property;
- rental income from a natural person or
- business income.
If a non-resident is registered as a sole proprietor in Estonia, he or she must submit an income tax return even if he or she did not receive income.
If a non-resident is resident in another country of the European Economic Area, he or she must submit an income tax return if:
- basic exemption in a larger amount than should be has been deducted from his or her income at the time of payment, in which case he or she must pay additional income tax on the basis of the income tax return;
- basic exemption has not been taken into account when deducting income tax from his or her income although he or she has a right to basic exemption. In that case, he or she will be refunded the overpaid income tax on the basis of his or her income tax return.
Income tax returns have to be submitted to the Estonian Tax and Customs Board by 30 April of the year following the year when the income was received, and income tax is paid into the bank account of the Estonian Tax and Customs Board by 1 October of the year of submission of the income tax return.
Filing of tax returns
Tax returns can be submitted to the Estonian Tax and Customs Board:
- in the Estonian Tax and Customs Board's e-services environment e-MTA. The completed and signed tax returns can be uploaded under the menu item “Communication”.
- digitally signed to the e-mail address firstname.lastname@example.org
- at a service bureau of the Estonian Tax and Customs Board
- by post to the address Lõõtsa 8a, 15176 Tallinn
After the tax return has been submitted, the Estonian Tax and Customs Board sends tax information, which includes, among other things, the amount of tax to be paid and the personal reference number required for the payment.
In case a reference number has been issued, it can be checked through a search of personal reference number by personal identification code or registry code issued by the Estonian Tax and Customs Board. Each person has always one reference number for the payment of all taxes.
The Estonian Tax and Customs Board shall not issue a tax notice to non-residents.
The income tax calculated on the basis of the tax return is paid into the bank account of the Estonian Tax and Customs Board.
Tax return forms
Non-residents have to submit their income tax return on form V1 in case they:
- received gains from the transfer of property in Estonia, or
- transferred securities and wish to carry forward the loss from the transfer of securities to the following periods of taxation.
Business income received in Estonia is declared on form E1. Form E1 has to be filed if a non-resident:
- is registered as a sole proprietor in the Estonian business register. The income tax return must also be filed when business income was not received.
- is registered as a sole proprietor in the register of another EEA contracting state.
Sole proprietors registered both in the Estonian business register and in a register of another EEA contracting state may deduct from their business income any certified expenses directly linked to the business activities carried out during the taxable period.
- received business income in Estonia but is not registered as a sole proprietor in Estonia. In such a case, expenses from the business income received in Estonia cannot be deducted.
A non-resident has to file form A1 if he or she has received taxable income in Estonia from work or the provision of services, remuneration of the member of a management or controlling body, rental income, licence fee, dividends, pensions, scholarships, grants, benefits, gambling winnings (if not based on operating permit) payments from pension funds, remuneration of entertainer of sportsperson; and on which no income tax has been withheld.
As a rule, income tax on the income listed above is withheld by the person who makes the payment. If income tax is not withheld by the payer, non-residents themselves have to declare the income received.
Obligations of withholding agents
Income tax on payments made to non-residents is generally withheld and declared to the Estonian Tax and Customs Board by the person that makes the payments (withholding agent). The withholding agent has to declare:
- payments to non-residents on annex 2 of form TSD, by the 10th day of the month following the month during which the payment was made, and transfer the income tax into the bank account of the Estonian Tax and Customs Board by the same date.
- dividends paid to a non-resident natural person and withheld income tax on form INF 1.
If income tax on the payments has been withheld at the rate prescribed by the Income Tax Act or tax treaty, the income tax withheld is considered the final income tax and the non-resident does not have to submit an additional income tax return on his or her own income.
Application of preferential tax rates of tax treaties and certificate of residency
In Estonia, the preferential rates of tax treaties can be applied immediately at the moment of payment. If a receiver of payment is resident in a country with which Estonia has concluded a tax treaty, the data concerning the residency of the recipient in the other country of the tax treaty must be entered in the register of taxable persons on the basis of a certificate confirmed by the foreign tax authority. Based on the data of annex 2 of form TSD and form INF 1, the income tax is immediately calculated at the rates provided for in the tax treaty.
As long as a non-resident has not submitted the certificate of residency, the rates of the Income Tax Act will apply.
A non-resident can apply for the refund of the overpaid income tax in Estonia if he or she submits to the Estonian Tax and Customs Board a certificate of residency issued by a foreign tax authority, which was valid at the time when the payment was made. The certificate of residency is valid for 12 months from the date of its confirmation by the foreign tax authority or for the period indicated on the certificate.
Using non-resident code on tax returns
On annex 2 of form TSD and on form INF 1, it is required to indicate an Estonian registry code – either Estonian personal identification code or registry code (non-resident code) issued by the Estonian Tax and Customs Board.
It is possible to check whether a non-resident code or certificate of residency has been issued through the inquiry of non-residency.
Employers have to register the employment of non-residents in the employment register. Entries in the employment register cannot be made by registry code issued by the Estonian Tax and Customs Board, for this purpose an Estonian personal identification code is required. Working for up to five days can be registered by the date of birth.
Last updated: 15.03.2022