The use of investment accounts has become increasingly popular. While just under 20,000 people used at least one investment account in 2020, over 87,000 people declared more than 132,500 investment accounts for 2025. This shows that investing via investment accounts is growing rapidly in Estonia.
When investing in financial assets using an investment account, the taxation of income earned on the investment can be deferred. For example, if a person deposits 10,000 euros into their investment account, invests it and makes a profit of 2,000 euros on the investment, they can reinvest the 2,000 euros without having to pay income tax immediately on the profit earned.
Tax calculations become important when a person wishes to withdraw money from the investment account. “The income tax liability only arises when the amount withdrawn from the account exceeds the contributions made to it. Therefore, to defer tax liability on income earned, it is important to declare investment accounts on your income tax return of a natural person every year,” explained Janelle Urres, the ETCB's risk manager for natural persons.
Investment accounts are often not declared
One of the most common mistakes is failing to declare an investment account. The holder of an investment account must ensure that the contributions to and payments from the account made during the previous year are included in their income tax return each year. The account must also be declared if no money was withdrawn from the account during the year and the investments remained in place – in this case, the account balance must be included in the following year’s tax return. If a parent has opened an investment account for a minor child, the parent must also declare the child’s account on the child’s behalf every year for as long as the account remains open.
The ETCB reminded users of investment accounts who had failed to declare their accounts of their obligation to do so. As a result of the reminders sent in the autumn of 2026, investment account holders declared the contributions to and payments from their accounts, which led to an increase in declared income tax liability by nearly half a million euros.
Investment account reports can be sent directly to the ETCB from the major banks (LHV, Luminor, SEB, Swedbank) and from the investment firm Lightyear. This must be done before you start filling out your income tax return. In this way, the required data will appear in Table 6.5 of the income tax return in the e-services environment e-MTA, without having to enter it manually.
The investment account reports of some banks do not automatically include the account balance from the previous year. In this case, you must check the balance each year from the previous year’s tax return and enter it manually into the investment account report in your online bank. “However, the prefilled data must be checked carefully – particularly to ensure that all contributions and payments, as well as dividends and interest received, are correctly reflected. If this is not the case, the information in the tax return must be corrected or updated,” noted Janelle Urres, the ETCB's risk manager. Information on accounts held abroad, however, must be entered in the tax return manually.
Data from previous years is not corrected
If an investment account has been in use for several years but data for some years is missing from the tax return, this may also affect tax calculations for subsequent years. In such cases, the ETCB recommends that you start amending the data from the earliest year, as the corresponding amount is carried forward to the next tax period.
It should be noted that submitted tax returns can only be amended retrospectively for a period of up to three years. Therefore, any investment account contributions that were not included in a tax return submitted more than three years ago cannot be included in subsequent tax calculations. If a contribution to an investment account has not been declared with a previous income tax return, this may affect subsequent tax calculations and result in an income tax liability, as the total amount of declared contributions may be less than the total amount of payments made from the investment account.
Unsuitable accounts are declared
Not all accounts related to investment qualify as investment accounts. For example, the platform of a crowdfunding or crypto asset service provider may not itself constitute an investment account.
However, under certain conditions, assets purchased through such a service provider may be financial assets permitted within the investment account system. It is therefore important to distinguish between bank accounts through which money is held and the assets in which investments are made.
You can check whether an account is suitable for use as an investment account by consulting the register of the relevant supervisory authority. This could be, for example, the Estonian Financial Supervision and Resolution Authority’s register of supervised entities, the European Banking Authority’s register, or the European Securities and Markets Authority’s register, links to which are available on the ETCB’s website.
Investment account is used for day-to-day expenses
An investment account should only be used to hold money intended for investment. If everyday expenses, such as food, housing costs or other purchases, are also paid for from the same account, these payments must be treated as withdrawals for the purposes of the investment account’s tax calculations.
For example, a person deposits 10,000 euros into an investment account, of which 8,000 euros is invested, and 2,000 euros is left in the account. If they later use the 2,000 euros in the account to pay rent or cover other everyday expenses, this is treated as a withdrawal from the investment account. All such payments must also be considered in the tax calculations for the investment account.
“Paying for day-to-day expenses via an investment account can complicate tax calculations and increase the likelihood of errors. It is therefore sensible to keep money intended for investment in a separate account and to use a regular account for everyday expenses,” advised Janelle Urres, risk manager at the ETCB.
Financial assets purchased in the ordinary system are transferred to the investment account system
A prerequisite for using an investment account and deferring income tax liability is that financial assets are purchased using funds held in the investment account. This means that, at the time of purchasing the financial asset, a choice must be made as to whether to use the ordinary system or the investment account system for the investment. You must continue to use the chosen system until the financial asset is sold.
“For example, shares, fund units, or bonds purchased using the regular account may not subsequently be transferred to the investment account system. If a financial asset has been purchased under the ordinary system, its sale must also be declared in accordance with the rules of the ordinary system,” stated Urres.
It is also important to declare the account as an investment account on time. The financial assets must have been purchased via the account, i.e. from the IBAN, that has been declared as an investment account in Part I of Table 6.5 of the income tax return.
Closure of an account is not declared
If a person stops using the investment account system or ceases to be a tax resident of Estonia and becomes a tax resident of another country, tax calculations for investment accounts in Estonia must be terminated. To do this, the date of closure of the investment account must be entered in Part I of Table 6.5 of the income tax return. In Part II of this table, the balance of funds in the account and the acquisition cost of the financial assets held in the account must be declared as a payment from the investment account.
Terminating the tax calculations for investment accounts on the income tax return does not, however, mean that the bank account or securities account is actually closed – the account may still be used, but the special rules for taxation of investment accounts will no longer apply. “Upon becoming a non-resident, tax calculations for investment accounts in Estonia must also be terminated, as only residents of Estonia may use the investment account system in Estonia,” clarified Janelle Urres.
The ETCB checks whether payments related to the closure of an investment account have been correctly declared. In June 2026, the ETCB sent a notification to 400 people who had indicated on their income tax returns that all their investment accounts had been closed but may have failed to declare the remaining balance in the account and the acquisition cost of financial assets. As a result of these notifications, payments from investment accounts totalling over 1.5 million euros were declared. Notifications were also sent to approximately 200 non-resident investment account holders, as tax calculations for investment accounts had not been terminated on their tax returns. As a result, payments from investment accounts totalling 2.9 million were declared.
ETCB’s recommendations for preventing errors
- Keep your day-to-day spending and investments separate. Use a separate account for investing.
- Consider which financial assets you wish to invest in, and which account is suitable as an investment account. Estonian banks and the investment firm Lightyear can send a report for you to include the data in the income tax return.
- Platforms operated by licensed crowdfunding or crypto asset service providers are not suitable as investment accounts. However, they are suitable as so-called extensions of an investment account for investing in crypto assets or crowdfunding.
- Set aside time to declare your investment account and review the transactions carried out at your bank or investment firm. Make sure that the correct details are entered in your tax return. Only then will your tax calculation be accurate.
- Purchase financial assets via an investment account. Financial assets purchased using the so-called ordinary system or your everyday account may not be transferred to the investment account system.
- You may use one or more investment accounts. Income tax is calculated across all accounts based on the time and date of transactions.
- Submit an annual tax return, declare contributions to and payments from your investment account, and carry the balance forward to the following year. Do this on behalf of any minor children as well.
- Closing an investment account means that the deferral of income tax liability comes to an end. It is therefore important to declare any money withdrawn from the investment account on your tax return and to pay income tax in a timely manner.
When using an investment account, it is important to keep track of all financial transactions that have occurred during the year. When submitting your income tax return each year, you must ensure that the information is correct. In particular, it is worth checking whether all investment accounts, contributions to and payments from the accounts, and details relating to the closure of investment accounts have been declared correctly. If there are errors in the data from previous years or anything has been omitted from the declaration, these should be corrected at the earliest opportunity.
From 2024, the range of accounts qualifying as investment accounts has been expanded, along with the range of payment institutions, e-money institutions, and investment firms. For more information on which accounts are suitable as investment accounts and for deferring tax on investment income, please visit the ETCB’s website.
You can find further information on financial assets and investment accounts on the ETCB's website.
