Entrepreneur account

Who benefits from the entrepreneur account

The entrepreneur account is useful for a person who provides services to other private persons in the areas of activity that do not involve any direct expenses, or who sells self-produced goods with low costs of materials or acquisition to private persons and legal persons.

Such services can be baby-sitting, housekeeping, gardening, repair or construction services that do not involve direct costs or in which case a customer pays for the costs. For example, a customer orders repair or construction services and buys the necessary tools and materials himself or herself.

Another example is the sale of self-produced goods to private and legal persons if the cost of raw material or source material is low compared to the selling price of the goods. Such a case could be the sale of handicraft and art or the sale of food, plants etc. grown or produced by a private person.

The entrepreneur account is also an appropriate solution for the new forms of entrepreneurship, allowing for the simplified taxation of fees paid by one private person to another through the ride-sharing service platforms like Uber, Taxify, Bolt, etc.

Who does not benefit from the entrepreneur account

Since the total amount received into the entrepreneur account (not only the profit from the provision of services or the sale of goods) is taxed with business income tax, it is not possible to deduct costs or expenses. Therefore, in the areas of activity that involve direct or high costs, it is more beneficial to operate as a sole proprietor or through a private limited company. For example, when selling or distributing goods, it is important to deduct the acquisition costs of the goods from the income.

A person who has an entrepreneur account is entitled to health insurance if the part of social tax in the business income tax paid in a calendar month is at least the amount of the minimum social tax liability. In 2026, the monthly rate on which the minimum social tax liability is based is 886 euros and the minimum social tax liability is 292.38 euros per month (886 × 33%).

To receive health insurance coverage, the minimum social tax liability for the previous month must be paid for the person. The entire necessary social tax does not have to come only through the entrepreneur account, but the fulfilment of minimum liabilities is calculated across all contracts under the law of obligations.

Insurance coverage begins the day after social tax is received by the Estonian Tax and Customs Board (on the 10th date of the month) and stops after one month if the minimum social tax liability has not been met by the 10th of the following month. The Estonian Tax and Customs Board submits data on persons for whom social tax in the amount of the minimum liability have been received to the Estonian Health Insurance Fund.

If the deadline (the 10th date) for fulfilling the liability falls on a public holiday or a day off, the deadline is the first working day following the public holiday or the day off. Therefore, insurance coverage arises the next day after the social tax is received.

For example, the 10th date was a Saturday, the data will be received by the Estonian Tax and Customs Board on the 12th (Monday), and the person's health insurance will become valid on the 13th (Tuesday).

An entrepreneur account owner can provide services and sell goods to private persons, companies, non-profit associations, foundations, legal persons governed by public law, state and local government authorities and other persons.

When providing a service to a resident company, non-profit association, foundation and religious association that is a legal person, it is necessary to take into account the fact that these persons will be subject to additional income tax (rate 22/78), which equates the tax burden with the tax burden of a regular employment relationship. The additional tax liability is intended to prevent shifting the regular employment relationship to a more favourable entrepreneur account.

Therefore, if the service fee is transferred to the entrepreneur account, it must be assessed who has received the service provided by the entrepreneur account holder – whether the employer (company) or the employee, and whether it may be the compensation of the expenses by the employer to the employee. Likewise, it must be assessed whether it may be the case of replacing the employer's employment contract or service contract by the use of an entrepreneur account.

If an employee has received the service and the employer compensates the employee for the expenses related to the work tasks, it is exempt from tax under subsection 3 of § 12 of the Income Tax Act. For example, in a situation where the employee used the Bolt taxi service and the employer compensated the employee for the travel expenses related to work tasks, this is a compensation of expenses exempt from tax. Even in a situation where the taxi transport service provider was the owner of an entrepreneur account, compensation for the cost of taxi service does not entail any additional tax liability to the employer (company) pursuant to clause 13 of § 34 and clause 1 of subsection 2 of § 51 of the Income Tax Act.

However, if the employer replaces the employment contract or the service contract by the use of an entrepreneur account, the company will incur an additional tax liability under the above-mentioned provisions. For example, in a situation where the company replaces the remuneration of a driver who has so far worked under an employment contract by the use of an entrepreneur account.

Thus, the company incurs an additional income tax liability (22/78) in a situation where the entrepreneur account replaces an employment contract, authorisation agreement, a contract for services or another service contract under the Law of Obligations Act.

There is no additional income tax in the case of the sale of goods.

Therefore, if a private person receives remuneration for providing services into the entrepreneur account from a resident company, non-profit association, foundation or religious association which is a legal person (hereinafter also ‘a payer’) and the remuneration is subject to taxation on the basis of the Simplified Business Income Taxation Act, the person will be subject to additional income tax (rate 22/78) on the expenses that are not related to business (clause 13 of § 34) and subsections 1–3 of § 51) of the Income Tax Act.

The entrepreneur account owner is obligated to inform the payer of the fact that he or she provides the service through an entrepreneur account and the service is taxable under the Simplified Business Income Taxation Act. Based on this information, the payer knows that it is obligated to declare the paid amount in Annex 6 to Form TSD under code 6080. It is required to pay income tax on expenses not related to business (rate 22/78).

If the entrepreneur account owner does not report that he or she is providing the service through an entrepreneur account, the payer is obligated to tax the payment made to a natural person for the service with all labour taxes.

The company can check the details of the entrepreneur account holder from the search of entrepreneur accounts.

State and local government authorities, legal persons governed by public law and non-resident companies are not subject to tax liability pursuant to clause 1 of subsection 2 of § 51 of the Income Tax Act.

If an amount has been mistakenly transferred to an entrepreneur account and it has been taxed with business income tax, the taxpayer should sign into the e-service environment e-MTA (select Communication – Correspondence – Entrepreneur account) and submit a reasoned request with proof that the amount received is not subject to business income tax.

The reasoned request must explain:

• the circumstances in which the erroneous transfer took place;
• the time of transfer;
• the amount transferred;
• the amount of tax to be refunded;
• the bank account number to which the refund should be made.

The added documents are additional proof for the reasoned request and the data submitted in the request. Such proof is, for example, a bank account statement, contracts, or other documents.

The Estonian Tax and Customs Board will refund to the taxpayer the tax paid in error.

No, you are not allowed to make deductions in a natural person's income tax return from the income received into the entrepreneur account (for example, tax-exempt income, training costs). In addition, the income tax part of the business income tax is not considered as paid or withheld income tax in the income tax return of a natural person.

For the purpose of LHV Pank, the entrepreneur account is a current account to which the simplified rules for the taxation of business income apply. Similar rules apply to the entrepreneur account and current account. For example, a bank card or a card payment terminal can be ordered for the entrepreneur account. Investment services are an exception – securities transactions are not allowed in the entrepreneur account.

For private persons, we recommend using the current account for daily operations that are not related to the entrepreneur account to avoid erroneous tax payments to the Estonian Tax and Customs Board.