Registration of non-resident employers
Before starting activities in Estonia, non-resident employers, including temporary agency agents, sole proprietors, foreign representations, other foreign institutions, international organisations and their representations with employees working in Estonia have to register with the Estonian Tax and Customs Board.
Non-residents who pay wages to Estonian residents or non-residents working in Estonia have to register themselves as employers with the Estonian Tax and Customs Board in case
- the obligation to register their permanent establishment in Estonia in relation to business activities in Estonia does not arise for them;
- they are not registered for VAT purposes in Estonia;
- they have no branches registered in the Estonian commercial register.
In order to be registered, an application for non-resident taxpayer on Form R2 has to be submitted to the Estonian Tax and Customs Board.
The applicant must also submit a document certifying the authorisation of the person representing the employer and a specimen signature of the person responsible for the permanent establishment which is notarised or officially certified by a tax authority.
A non-resident employer may authorise other persons (e.g. an employee) to represent him or her for the performance of the obligations arising from tax legislation in Estonia. However, despite the fact that all activities (registration, declaration and payment of taxes) can be carried out by an authorised person, the non-resident employer is still a taxable person and all financial obligations shall be performed in his or her name and on his or her account.
In case of termination of activities in Estonia, the non-resident employer has to submit an application on form R4 within five working days.
Registration of permanent establishment
Before starting activities in Estonia, the following persons have to register with the Estonian Tax and Customs Board: non-resident legal persons, sole proprietors, and associations of persons or pools of assets not holding legal personality that have created a permanent establishment in Estonia, which is not entered in the commercial register as a branch.
The data of the branch registered in the Estonian commercial register automatically reach the database of the Estonian Tax and Customs Board, only the status of the permanent establishment needs to be specified.
In order to be registered, a permanent establishment that is not entered in the commercial register as a branch has to submit a registration application for non-resident taxpayer on Form R2.
The following documents must be added to the application:
- a copy of the certificate of registration, an extract from the register or other documents certifying the existence of the legal person;
- a document certifying the authorisation of the person responsible for the permanent establishment;
- a specimen signature of the person responsible for the permanent establishment which is notarised or officially certified by a tax authority;
- if a tax representative has been designated, the written agreement between the tax representative and the non-resident.
Within five working days as from changes in the data or liquidation of the permanent establishment, it is required to submit an application on Form R4 to the Estonian Tax and Customs Board.
Applications and certificates
Registration of non-resident recipients of payments
In order to declare the payments made to non-residents, the Estonian registry code of the non-resident is required. In order to apply the tax rates arising from tax treaties, which are more favourable than the rates provided for in the Income Tax Act, the payer must also submit to the Tax and Customs Board a certificate of residency approved by the tax authority of a foreign country.
Payments to non-resident natural and legal persons are declared on Annex 2 to Form TSD, of the declaration of income and social tax, unemployment insurance premiums and contributions to mandatory funded pension, where the non-resident recipient’s registry code in Estonia must be indicated. Persons registered in the employment register should normally have an Estonian personal identification code.
A registry code in Estonia means:
- in the case of natural persons, an Estonian personal identification code or the code of the register of taxable persons (non-resident code) issued by the Estonian Tax and Customs Board, and
- in the case of legal persons, the code of Estonian commercial register (branch) or the code of the register of taxable persons issued by the Estonian Tax and Customs Board (NB! not a value added tax identification number).
One of the above registration codes is sufficient to declare income. If a person already has one of these codes, it is not necessary to apply for a new code to submit a new tax return.
Estonian personal identification code can be applied for at the Estonian Police and Border Guard Board, from a local government together with the registration of a residence or, if it is not planned to register a residence in Estonia, from Estonian representations.
Applying for a non-resident code
If a non-resident does not have a registry code in Estonia, it is possible to apply for the code of the register of taxable persons (non-resident code) at the Estonian Tax and Customs Board.
To avoid double-issuance of codes, we suggest checking beforehand if you already have a registry code issued by the EstonianTax and Customs Board through the inquiry of non-residency.
By the inquiry, it is also possible to check whether the Estonian Tax and Customs Board's register includes a non-resident's certificate of residency issued by the tax authority of a foreign country.
In order to get a registry code, it is necessary to apply for the registration of a non-resident with the Tax and Customs Board.
The application can be submitted:
- in the e-services environment e-MTA: Registers and inquiries – Registration – Registration of a non-resident
- digitally signed to the e-mail address firstname.lastname@example.org
- at a service bureau of the Estonian Tax and Customs Board
The Estonian Tax and Customs Board will issue the code of the register of taxable persons within 10 days.
The code of taxable persons (non-resident code) assigned to a non-resident does not change the person’s residence. A person cannot become a resident of Estonia with a non-resident code, neither does the code confirm the tax residency of a foreign country. The person making payments must still declare the taxable payments to non-residents on Annex 2 to Form TSD and non-resident natural persons must declare their income on the non-resident's income tax return (Forms A1, E1, V1).
The non-resident code is not sufficient to apply preferential tax convention rates. For this purpose, it is necessary to submit to the Estonian Tax and Customs Board also a certificate of residency approved by a foreign tax authority on Form TM 3 or a certificate from a foreign tax authority containing the same information. The certificate of residency of the natural person is valid for 12 months; the certificate of residency of the legal person is valid for 36 months unless otherwise stated on the certificate.
If the data of the certificate of residency have been entered into the database of the Estonian Tax and Customs Board, they can be found through the inquiry of non-residency.
If there is a valid certificate of residency, the tax rate of the convention for the avoidance of double taxation with respect to income tax concluded between Estonia and the foreign country concerned shall apply to the payments on Annex 2 to Form TSD.
If the recipient of income does not have a valid certificate of residency, the income tax rates of the Estonian Income Tax Act apply to the payments, and the tax convention will apply after a certificate of residency has been issued.
Last updated: 12.05.2022