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In this page: Accounting Rules | Tax Rates | Intellectual Property | Legal Framework | Standards | Business Practices

 

Accounting Rules

Tax Year
The fiscal year begins on January 1st and ends on December 31st of the same year.
Accounting Standards
Two accounting principles coexist in the Estonian law: the Estonian accounting principles and the IFRSs (International Financial Reporting Standards).

Commercial companies can choose whether to comply their annual financial statements with the Estonian accounting principles or with the IFRS. On the other hand, listed companies, credit institutions and insurance companies are required to follow IFRSs.

The Estonian Accounting Standards (RTJ) can be regarded as summarized and simplified translations of the corresponding IFRSs.

Accounting Regulation Bodies
EASB
Accounting Reports
The main financial documents in Estonia are the balance sheet, the profit and loss account and the cash flow statement.
The Accounting Act sets a number of formal requirements to accounting source documents. Each entity has to prepare its internal regulations on accounting and the chart of accounts.

 

Accounting registers can be maintained as hard or electronic copies. The annual statements should be prepared in Estonian language and must be signed by the management board.

Publication Requirements
The publication is rarely used in Estonia. But since 1997, some accounts of companies are disclosed to the public.
Professional Accountancy Bodies
Estonian Board of Auditors
EAA , European Accounting Association
Certification and Auditing
Audit has been compulsory for the majority of companies since 1991. Under the Commercial Code, an audit is compulsory for all public companies. It is compulsory for a private limited company if its share exceeds EEK 400,000 or if the audit requirement has been established into the law or the articles of association. In addition to the requirements of the Commercial Code, according to the accounting Act, auditing is compulsory for all entities exceeding two of the three following criteria: net sales exceed EEK 10 million, the number of employees exceeds 10 and total assets exceed EEK 5 million. You can contact an external auditor: KPMG, Deloitte, Ernst & Young, PricewaterhouseCoopers.
Accounting News
Business and accounting in Estonia
IAS Plus

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Tax Rates

Consumption Taxes

Nature of the Tax
Value Added Tax (VAT) - Käibemaks (local name)
Tax Rate
20%
Reduced Tax Rate
Reduced rates are 0% and 9%.
A lower 9% rate applies to books (excluding educational books), medicines and certain supplies of heating and energy, accommodation.
The 0% rate applies to exports and intra-Community supply and supplies relating to international transport.
Are exempted of VAT, leasing of immovable property, postal and heath services, social and insurance services among others.
Other Consumption Taxes
Excise taxes are levied on tobacco, alcohol, electricity, some packaging materials and motor fuel. To get further information on the taxation system, please visit the Website of the Ministry of Finance.
More detailed information on excise duties is available on the European Commission website.

Learn more about Service Providers in Estonia on Globaltrade.net, the Directory for International Trade Service Providers.

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Corporate Taxes

Company Tax
20%
Capital Gains Taxation
Capital gains are treated as ordinary income of Estonian resident companies but they are taxed only where there is a profit distribution.
Main Allowable Deductions and Tax Credits
The 2000 Income Tax Act changed the taxation approach of Estonia and companies became subject to income tax solely with respect to distributions. In other words, under this new law, the corporate entities are exempt from income tax on undistributed profits regardless whether they are reinvested or retained. Payment to foreign affiliates are also tax exempt.
Other Corporate Taxes
Land tax, social security contributions, excise duties and stamp duties, local taxes, gambling tax, heavy goods vehicle tax exist in the taxation system. More information can be found on the website Investinestonia.
Other Domestic Resources
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Country Comparison For Corporate Taxation

  Estonia Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 8.0 28.0 11.0 9.0
Time Taken For Administrative Formalities (Hours) 85.0 260.0 175.0 207.0
Total Share of Taxes (% of Profit) 67.3 40.5 46.7 46.8

Source: Doing Business - Last Available Data.

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Individual Taxes

Tax Rate

Individual income tax 20%
Allowable Deductions and Tax Credits
Many deductions are allowed, and some exemptions like capital gains, scholarships paid on the basis of law, fringe benefits, accommodation reimbursements for business trips, insurance contracts, compensation for the use of private vehicles, child allowances and other subsidies and compensation paid from the State.
Special Expatriate Tax Regime
A limited list of taxable items applies to non-residents: income from work under a labour contract or contractor's agreement in Estonia; income from a business carried on in Estonia, dividends paid by Estonian companies, interest income received from Estonia, royalties.

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Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
See the list of the convention signed
Withholding Taxes
Dividends: 0% ; Interest: 0%/21% ; Royalties: 0%/10%

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Sources of Fiscal Information

Tax Authorities
EMTA
Other Domestic Resources
Estonian Investment and Trade Agency
Consult Taxation trends in the European Union.

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Learn more about Taxes and Accounting in Estonia on Globaltrade.net, the Directory for International Trade Service Providers.

Intellectual Property

National Organizations
The patents office of Estonia was created on 3rd December 1991. It started functioning in 1992. Among its activities were included the implementation of laws concerning trademarks of manufactured products or business trademarks, the law concerning the copyrights of authors, laws concerning patents and finally the laws concerning utility models.
The principle of priority to the first patent applicant is applied.
Estonia is a member of the WIPO (World Intellectual Property Organization) since 1994, and is also a member of Paris and Berne Conventions.
Regional Organizations
Estonia has signed several regional conventions on intellectual property. For instance, the Paris and Berne Conventions, Rome convention as well as the Madrid protocol.
 

National Regulation and International Agreements

 
Type of property and law Validity International Agreements Signed
Patent
 
Patent Act, March 16, 1994 (last amended October 27, 1999)
20 years
Trademark
 
Trademark Act, August 1992 (last amended December 1997)
10 years (renewable) Protocol Relating to the Madrid Agreement Concerning the International Registration of Marks
Design
 
Industrial Design Protection Act, November 18, 1997 (last amended November 25, 1998)
5 years, renewable for two further 5-year periods  
Copyright
 
Copyright Act, November 1992, (last amended February 1999)
The term of protection is the life of the author and seventy years after his or her death irrespective of the date in which work is lawfully made available to the public WIPO Copyright Treaty
Industrial Models
 
Industrial Design Protection Act, November 1997 (last amended in 1998)
5 years from the date in which the application has been duly filled in.  

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Legal Framework

Independence of Justice
Judiciary is independent in Estonia, and generally free from government influence.
Equal Treatment of Nationals and Foreigners
Foreign nationals can expect a fair trial from the country's judicial system.
The Language of Justice
The judicial language in the country is Estonian.
Recourse to an Interpreter
Having an interpreter is always possible.
Sources of the Law and Legal Similarities
The main source of the law is the Constitution of June 1992 and has been going through a transition period since the Soviet era. The legal system is influenced by German traditions and is based on civil law system. Estonia being a member of the European Union, the national law in the country needs to comply with the conditions of the Community legislation.
Checking National Laws Online
Estonian legal acts in English

Learn more about Lawyers and Legal in Estonia on Globaltrade.net, the Directory for International Trade Service Providers.

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Standards

National Standards Organizations
Estonian Centre for Standardization
Integration in the International Standards Network
The Estonian national standards body (EVS) is member of European Committee for Standardization (CEN), of European Committee for Electrotechnical Standardization (CENELEC), of International Organization for Standardization (ISO), of International Electrotechnical Commission (IEC), of European Telecommunications Standards Institute (ETSI) and of International Telecommunication Union (ITU).
Classification of Standards
The main standards are those based on Europe's standardization system, with "CE" marking.
Online Consultation of Standards
More information about national standards in Estonia can be found on the Estonian Centre for Standardization' website.
Certification Organizations
Certification Centre of Estonia

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Business Practices

General Information
Kwintessential, Business culture and practices in Estonia
Opening Hours and Days
Business hours are between 8 am and 6 pm from Monday to Friday.
 

Public Holidays

New Year's day January 1
Good Friday Friday before Easter
Easter Sunday Depending on Easter's date
Spring Day May 1
Pentecost Moveable (50 days after Easter)
Victory Day June 23
St John's Day or Midsummer Day

 

June 24
Day of Restoration of Independence August 20
Christmas Eve December 24
Christmas Day December 25
Boxing Day December 26
 
 

Periods When Companies Usually Close

Winter holidays Between Christmas and New Year
Summer holidays Starting on Midsummer (Summer solstice)
 

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Last Updates: January 2015