The training expenses may be deducted from income only if the expenses were paid for studying in:
- a state or local government educational establishment;
- a university in public law;
- a private school which has got in the framework of the study programme an activity licence or a registration entry in the Estonian Education Information System (EHIS) or the right to provide a higher education
- a foreign educational establishment of equal status with the aforementioned, or for studying on fee-charging courses organised by such educational establishments.
Whether a school has a valid registration, and to which types of training (further education, in-service or hobby training) does the registration apply can be verified on the Estonian Education Information System (EHIS).
Kindergarten and extended-day group fees
You can also deduct the fees for a kindergarten operating as an educational institution and the fees for an extended-day group of an educational institution.
Food allowances are not the training expenses and cannot be deducted from income.
The expenses of motor vehicle driver training of categories AM, A and B, and subcategories A1, A2 and B1 are not deducted from taxable income. Expenses paid for studies at a hobby centre can be deducted only if a person studying at a hobby centre is below 18 years of age on 1 January of the calendar year of the payment of the training expenses. For example, if a student was 17 years old on 1 January 2021, and on 1 March he or she turned 18 years old, then for this student the full amount of training expenses paid to the hobby centre in 2021 can be declared.
Upon payment of training expenses, it should be ensured that the person's name and ID code are made known to the training institution. If the training expenses are paid for somebody else (e.g. for a child), the training institution needs to know both the name and ID code of the trainee (a person for whom the training expenses are paid) and the name and ID code of the payer. Provision of information on the person who paid the training expenses is very important if the trainee does not have any income of their own wherefrom to deduct the training expenses.
The training expenses cannot be deducted in an amount bigger than the amount of taxable income. For example, if the only income for a person is the taxable dividend by the tax rate 20/80 at the level of an Estonian company (reflected in table 7.1), then the person has no taxable income wherefrom to deduct the training expenses. The dividend regularly paid by a company wherefrom the income tax of 7 per cent has been withheld (reflected in the first part of table 5.1) shall be deemed to be the taxable income and on declaring such a dividend the training expenses may be deducted.
The training expenses cannot be deducted from income on account of a scholarship or grant which is exempt from income tax. For example, it is not allowed to deduct the training expenses paid for courses of the official language, if a stipend not subject to taxation is received as a compensation for courses or if the legal person has compensated the training expenses. Also, it is not allowed to declare the cost of a child's sport or other hobby training if a local government has reimbursed that cost to the parent.
The amounts paid separately for various training aids (stationery goods, exercise-books, books, dictionaries, etc.) cannot be deducted from the taxable income.
Transfer of training costs
A person whose training expenses exceed his or her taxable income or the limit of the deduction (1200 euros, including the housing loan interest, and gifts and donations) may transfer the unused part of the training expenses deductions remaining to his or her spouse.
The unused part of training expenses (remaining balance) can be transferred to the spouse if the couple were married at the end of the calendar year.
If the spouse has sufficient taxable income, he or she can deduct the remaining balance from his or her taxable income. The person does not need to calculate the balance of the training expenses himself or herself. When submitting the income tax return in the e-MTA, the remaining balance of the training expenses will be displayed during the tax calculation, and if a balance occurs, a person can fill to his or her income tax return the spouse's data to whom the remaining balance will be transferred.
All educational institutions submit to the Estonian Tax and Customs Board by 1 February information on the training expenses paid by the persons to an educational institution during the previous year. The Estonian Tax and Customs Board enters the data on the training expenses on pre-completed income tax returns, table 9.6.
If a pre-completed tax return does not contain information on the training expenses or the data differ from the information known to the taxpayer, you should contact the educational institution and ask the institution to provide information to the Estonian Tax and Customs Board or to correct the data.
You may amend a pre-completed tax return yourself as well, but in this case the Estonian Tax and Customs Board may request you to submit a document issued by the educational establishment on the payment of the training expenses.
The document issued by an educational institution on acknowledging receipt of the payment is not a proper certificate of training expenses.
Pursuant to § 26 (1) of the Income Tax Act, a resident natural person has the right to deduct his or her training expenses as well as the training expenses of a relative in descending line, sister or brother of less than 26 years of age or, if no such training expenses are incurred, the training expenses 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.
An educational establishment of the state or local government and a private school holding an activity licence, registration in the Estonian Education Information System (EHIS) ) or the right to provide instruction of professional training, have to declare the training expenses specified in § 26 of the Income Tax Act paid by natural persons in a calendar year to the Tax and Customs Board on Form INF 3.
In the case of in-service training, the study or course must be related to a study programme aimed at the achievement of a professional, occupational or vocational competence contained in the study programme of formal vocational education or described in a professional standard. The study programme is published on the website of the educational establishment and its qualifications are registered in the Estonian Education Information System (EHIS). In the EHIS, it is possible to verify whether an Estonian educational establishment has a valid registration.
Hobby schools have to provide information only for students who are less than 18 years old on 1 January of the calendar year of payment of the training expenses.
If a person is studying at a foreign educational establishment, he or she has to prove that their study there is equivalent to the training to which tax incentives are applied in Estonia. A certificate issued by an educational establishment is the best proof for verifying that the educational establishment is recognized by the state in which it operates. In addition, data on the person being trained and the person who paid the training expenses, the type of training, the amount paid for the training and the time of payment of the training expenses must be certified.
Both the data of a person who paid for the training and a person being trained should be indicated on Form INF 3. It is assumed that the actual payer of training expenses is a person who makes a cash transfer to the school. If the educational establishment has concluded a contract with the payer of training expenses, the training institution may declare the data of the person who paid the training expenses based on the contract. In a situation where on INF 3, the educational establishment has indicated that a payer of training expenses is a minor who has no income of his/her own wherefrom to deduct the training expenses, Estonian Tax and Customs Board can accept that the training expenses are declared by the parent of the minor.
Last updated: 23.03.2022