The investment account is a cash account (standard bank account) opened with a resident credit institution of a member state of the Organisation for Economic Cooperation and Development (OECD) or in the permanent establishment of a credit institution located in the OECD country.
Estonian credit institutions and the affiliated branches of foreign credit institutions operating in Estonia can be found in the Register of Supervised Entities of the Financial Supervision Authority.
A securities account is not an investment account.
A person may have one or several investment accounts. In order to postpone the income tax liability, transactions with financial assets shall be concluded through the investment account.
The definition ’financial assets’ includes, for example, the publicly traded securities, shares and units of an investment fund, bank deposits and contributions made under unit-linked life assurance contracts (subsection 171 (2) of the Income Tax Act).
The definition ’financial assets’ does not include insurance contracts for a funded pension and units of pension funds, life assurance contracts, on the stock exchange non-marketable holdings in companies, the money granted on the basis of loan agreements, derivative instruments, which underlying are not financial assets and currency investments, as well as immovable property and precious metals.
Financial assets shall be acquired for the money in an investment account and the money obtained from the sales of financial assets or the income received on financial assets shall immediately be transferred to an investment account. Also in the event that services of an investment firm (or brokerage firm) shall be used for investment.
The data about the investment account and the income on financial assets shall be declared in a resident natural person’s income tax return (hereinafter income tax return) in table 6.5. In the income tax return shall be declared only contributions to the investment account and outpayments from the investment account. If the outpayment exceeds the payment to investment account, the tax liability shall arise.
In table 6.5 of the income tax return, in general, the following shall be declared only:
- the money transferred to the investment account (cash account) and
- the money outpayments from the investment account (cash account).
No purchase/sale of financial assets (for example, the securities which are traded publicly, units of investment funds, bank deposits) or the movements between the investment account, securities account and the deposit account shall be declared in table 6.5.
The following amounts of contributions to the investment account shall be declared in table 6.5 of the income tax return as well:
- upon opening an investment account, the amount of balance in the account,
from financial assets the dividends received from abroad and has taxed in a foreign state (these shall be declared in addition in table 8.8),
from financial assets the interests received from abroad and has taxed in a foreign state (these shall be declared in addition in table 8.1),
from financial assets the dividends received in Estonia and has taxed in Estonia (are in the pre-completed table 5.1 or 7.1),
from financial assets the interests received in Estonia and has taxed in Estonia (are in the first part of the pre-completed table 5.1).
The amount of contribution is not non-taxed dividend and interest, received from financial assets.
The following outpayment from the investment account shall be declared in table 6.5 as well:
- the income received on the financial assets which is not immediately transferred to the investment account.
Remittances between the investment accounts shall be declared neither as contributions nor as outpayments.
In table 6.5 the balance of the account shall be calculated after each contribution to the investment account and outpayment. The taxable amount shall arise, if the outpayment made from the investment account exceeds the balance of the contribution. If there are several investment accounts, then the taxable amount shall arise, if the outpayments made from all the investment accounts exceed the balance of the contributions.
If the balance of the investment account is 2000 euros, the taxable amount shall arise if the outpayment from the investment account exceeds 2000 euros.
If during a calendar year neither contributions to the investment account nor outpayments from the investment account have been made, then the corresponding notation shall be made in table 6.5 and the balance of the contribution shall be carried forward to the following calendar year.
You can read more about the taxation of income from securities in general on the page "Transfer of securities".