Estonia - Tax Guide for Freelance Contractors

Tax residents in Estonia:          are liable to pay Estonian tax on their worldwide income,
Non tax residents in Estonia:   are liable to pay tax on Estonian-source income only.

Individuals will be regarded as tax residents:

• if they have a permanent place of residence in Estonia, or
• if they remain in Estonia for 183 days or more during a 12-month period.

Married persons may file a joint tax return:

• if both spouses are resident in Estonia,
• if one spouse is resident in Estonia and the other in another EU member state and has received at least 75% of his taxable income from   Estonian sources, or
• if both spouses are resident in another EU member state and at least 75% of their aggregate income comes from Estonia.

Taxable income includes:

• employment income,
• business income,
• gains from the transfer of property,
• rent and royalties,
• dividends and interests.

Certain deductions and allowances are permissible for 2010 including:
 

• a personal allowance of EEK 27’000 (approx. EUR 1700),
• interest payments for loans for the acquisition or reconstruction of a house or apartment,
• personal educational expenses for dependents under 26 years,
• alimony and maintenance payments are fully deductible,
• premiums paid to qualifying pension schemes and funds are deductible up to 15% of the individual’s taxable income.

Benefits in kind like accommodation, company car, lunch vouchers or similar items are usually not considered taxable income for the employee, but are taxable for the employer.

Income tax rates for 2010

• 21.00% flat tax rate.

The employer deducts tax at source from the gross salary.

Filing date:

Tax returns should be submitted by 31 March (income on employment) or 1 October if any additional income is declared.