However, only refugees who are Estonian tax residents can benefit from deductions.
The owner of services for non-residents at the Tax and Customs Board, Kristel Ilumäe, says that now, before the period of submission of income tax returns, is an appropriate time for people to review their tax residency data.
"In order to make use of possible deductions, war refugees, as well as everyone else who has changed the country of residence and earned income in Estonia, must have their tax residency determined by the Tax and Customs Board and then have the opportunity to submit an income tax return in February."
The determination of residency is important because income both from Estonia and abroad is taxed and the final income tax liability is determined in the country of tax residency. For this purpose, an Estonian resident must declare his or her total income in the income tax return, regardless of which country it has been earned in, as well as the income tax paid in Estonia and abroad. The application of certain deductions, benefits and compensations, as well as the calculation of basic exemption, also depends on residency.
A tax resident of Estonia is a person whose permanent residence is in Estonia or who stays here for at least 183 days over the course of a period of 12 consecutive calendar months. In the case of countries with which Estonia has entered into an agreement for the avoidance of double taxation with income tax, the determination of residency also depends on whether, for example, a person’s family is also in Estonia or stayed abroad. Estonia and Ukraine have signed an agreement for the avoidance of double taxation.
According to the Tax and Customs Board, 32 080 Ukrainian citizens earned taxable income in Estonia in 2022. Of them, 17 474 began to earn taxable income here after 24 February 2022, suggesting that they are people who fled the war and then entered the Estonian labour market.
“We ask people to sign in to the Tax and Customs Board’s e-services environment and check the information about their tax residency, the income payers have declared and the basic exemption amount used. The application for determination of residency can be submitted already today, it does not depend on the start date of the submission of income tax returns," Ilumäe said.
The submission of income tax returns of natural persons begins on 15 February in Estonia. If a person has an Estonian personal identification code and a way for authentication, e.g. an ID-card, the income tax return can be submitted in the e-services environment. The possible refund of income tax is calculated automatically, so there is no need to come to a service bureau. If there are correct contact details and bank account information in the e-services environment, the overpaid income tax will also be refunded automatically," she added.
The application for determination of residency of a natural person (form R) can be submitted most conveniently in the e-services environment of the Tax and Customs Board. It is also possible to send an application that is digitally signed to the e-mail address [email protected] or submit it in paper form and signed to one of the service bureaus of the Tax and Customs Board.
