Amendments to the Security Tax Act
Amendments to the Security Tax Act The security tax is a new temporary type of tax introduced to finance the country's defence capability, with the aim of spreading the burden more widely across the entire economy in order to ensure sustainable funding of defence expenditure. The Security Tax Act will apply to: natural persons, companies and non-residents who earn taxable income in Estonia. The security tax is expected to apply until the end of 2028 and consists of three parts: 1) a 2% VAT increase […]
Taxation of gifts and donations
Taxation of gifts and donations December is the Christmas month, which for many entrepreneurs means it is time to plan gifts. Gifts are always a pleasure to give and receive, whether it is to thank business partners, recognise employees or support charity. Although gifts are given from the heart and out of goodwill, accounting and tax returns require precision and care so that gifts do not result in unexpected […]
Work ability allowances for persons with reduced work ability
Work ability allowances for persons with reduced work ability Reduced work ability can affect a person's daily life on several levels, especially in terms of participation in the labour market and coping. Estonia has established a system that supports people whose work ability has been reduced or is lacking for health reasons. This blog post explains which work ability allowances are available in Estonia, who they are intended for and how to apply for them. What is the work ability allowance? The work ability allowance is a financial benefit, […]
Accounting for investment property – at cost or at fair value?
Recognition of investment property – at cost or at fair value? Investment property is a property, land or a building/part of a building or both, that is held by the accounting entity primarily to earn rental income, for capital appreciation or both, rather than for use in the production of goods or services, for administrative purposes or for sale in the ordinary course of business. Investment property is initially recognised in the balance sheet at its cost, which also includes transaction costs related to the acquisition […]
Annual report of a non-profit association
Annual report of a non-profit association An NPO, i.e. a non-profit association, is a voluntary association of persons whose objective or main activity may not be earning income through economic activity. The income of a non-profit association may be used only to achieve the objectives set out in its articles of association, and profit earned may not be distributed among its members. A non-profit association may be ordinary or with tax incentives. The website of the Tax and Customs Board can be used to check whether a non-profit association has income tax incentives or […]
How to submit an annual report?
How to submit an annual report? All persons subject to accounting obligations in Estonia are required to submit an annual report. The report must be submitted to the Commercial Register within 6 months of the end of the financial year. It is important to note when the financial year ends and how long it is. For example, if the financial year ended on 31.12, the deadline for submitting the report is 30.06. In most cases the financial year is the calendar year (01.01-31.12), but the company's articles of association may […]
Income tax on dividends
Income tax on dividends A dividend is the income paid to the owners of a company. If the company has been operating for at least one year, the annual report has been submitted and approved and the share capital has been paid in, dividends may be paid out up to the amount of retained earnings from previous periods. It must not be forgotten that dividends paid out are also subject to income tax. Below we explain how dividends are taxed: If dividends are paid for the first […]
Minimum equity requirement and measures to restore equity
Minimum equity requirement and measures to restore equity Equity, or net assets, is the residual interest in the assets of an accounting entity after deducting all of its liabilities. A company's equity consists of the capital invested by the owners (share capital), retained earnings and reserve capital. Negative equity, or negative net assets, means that the company does not have the funds to meet all of its obligations, i.e. the company's liabilities exceed its assets. Equity requirement Previously […]
Tax changes 2024-2025
Tax changes 2024-2025 There has been much talk about the tax changes awaiting us in 2024 and 2025. As part of the changes, several tax incentives will be abolished, the income tax and VAT rates will be raised, and the regressive basic exemption will be replaced with a uniform basic exemption. Here is a brief overview of the upcoming changes. VAT changes The standard rate is 22% (previously 20%) of the taxable value, from 01.01.2024 Accommodation with breakfast – 13% (previously […]
Taxation of bonuses – non-monetary and monetary bonuses
Taxation of bonuses – non-monetary and monetary bonuses Companies reward their employees to motivate them to perform better. There are various ways to reward employees, ranging from a kind word to the payment of additional pay. This rather psychological type of bonus (an internal certificate of recognition, offering career opportunities, recognition for good results) is naturally not subject to taxation. However, tax issues must be considered in the case of bonuses with a monetary value. Non-monetary […]