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Non-residents, e-residents
Determining residency
Registration of non-resident
Non-resident as an employer
Taxation of the salary and wages of foreigners
Taxation of the profit of a permanent establishment
Tax representatives of non-residents
Tax liabilities of companies established by e-residents
E-services and communication

Non-resident, e-resident

A foreign person has to pay taxes in Estonia on income received in Estonia and salaries and wages of employees staying in Estonia.

In order to declare income in Estonia, persons need to be registered in Estonia. When operating in Estonia for a longer period, you can apply for access rights to the e-service portal of the Estonian Tax and Customs Board.

Double taxation is avoided by bilateral tax treaties. For the application of tax reductions resulting from international tax treaties, it may be necessary to submit a certificate of tax residency issued by a foreign tax authority.

Determining residency

A non-resident legal person pays income tax in Estonia only on Estonian income. Income tax is usually withheld upon making a payment, but in certain cases the non-resident is obliged to declare income. Registry codes are necessary for non-residents to declare their income. A permanent establishment or an employer must be registered in the Tax and Customs Board.

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Registration of non-residents

Non-residents not registered in the commercial register in Estonia and operating in Estonia through a permanent establishment or non-residents not having a permanent establishment but being employers in Estonia have to register with the Estonian Tax and Customs Board. Likewise, non-resident employees and recipients of payments not having an Estonian personal identification code have to be registered with the Estonian Tax and Customs Board.

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Non-resident as an employer

A non-resident employer has the obligation to register employees in the employment register, to declare the remuneration and fringe benefit paid to employees, to withhold taxes from the remuneration, and to transfer the taxes to the Estonian Tax and Customs Board. Only the employer pays income and social taxes on fringe benefits in Estonia.

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Taxation of the salary and wages of foreigners in Estonia

Upon the taxation of the salary and wages of foreigners in Estonia, it has to be taken into account whether the employee is a posted worker or an employee on a business trip, and also how long the employee is staying in Estonia.

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Taxation of the profit of a permanent establishment

A non-resident’s permanent establishment in Estonia pays income tax on profit and assets both in monetary or non-monetary form taken out of the permanent establishment. Specificities arising from tax treaties are taken into account in taxation.

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Tax representatives of non-residents

The tax representative of a non-resident is a person to whom a corresponding activity licence has been issued by the Estonian Tax and Customs Board (ETCB) and whom a non-resident may authorise to represent the non-resident for the performance of the obligations arising in Estonia from an Act concerning a tax or from the Taxation Act.

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Tax liabilities of companies established by e-residents

An Estonian company formed by an e-resident is a resident of Estonia that pays income tax in Estonia on its worldwide income, however, the timing of taxation is deferred until the time that profits are distributed (dividend payment).

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E-services and communication

E-residents can use the e-services of the Estonian Tax and Customs Board under the same conditions as persons holding an Estonian ID-card. The language of tax proceedings is Estonian.

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business client non-resident

Last updated: 13.04.2022

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