For non-residents

A non-resident in Estonia pays income tax only on the income received in Estonia. The concept of a resident plays an important role in taxation, as the extent to which a person’s income is taxed depends on whether the income is received from all over the world or only from Estonia. A resident is a person with unlimited tax liability, in other words, both Estonian and foreign income are taxed in Estonia, but double taxation is avoided.

A natural person is a resident in Estonia if at least one of the following conditions is met:

  • his or her place of residence is in Estonia
  • he or she stays in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months
  • he or she is an Estonian diplomat who is in foreign service.

In other cases, a natural person is a non-resident.

A person is considered a resident from the date of his or her arrival in Estonia.

If a person is simultaneously a resident in Estonia and in another contracting state of the convention for the avoidance of double taxation and the prevention of fiscal evasion (hereinafter the tax treaty), the double residency of the person is avoidable under the tax treaty.

If the residency determined under the tax treaty differs from the residency determined by law, the provisions of the tax treaty shall apply.

A natural person has to notify the Tax and Customs Board of the creation or change of the residency on Form R. Based on the information provided, the Estonian Tax and Customs Board will determine whether the person is a resident or non-resident in Estonia. The form also helps to resolve potential cases of double residency in the application of the tax treaty.

A Latvian resident comes to Estonia every day to work for an Estonian company. Due to his work, he stays in Estonia for more than 183 days. Thus, under the Estonian Income Tax Act, he is a resident of Estonia, but because of his place of residence in Latvia, he is also considered a resident of Latvia. Pursuant to Article 4 of the tax treaty concluded between Estonia and Latvia, the residence in Latvia becomes decisive for determining his residency, and therefore the person is considered a non-resident in Estonia.

Apply for registry code

A non-resident needs an Estonian registry code to declare income in Estonia. In order to apply the tax rates arising from tax treaties, which are more favourable than those provided for in the Income Tax Act, the payer has to submit also a certificate of residency of the non-resident recipient of income to the Tax and Customs Board. The certificate must be confirmed by the tax authority of the non-resident's country of residence.

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Taxation of income and tax treaties

Non-residents have a tax liability in Estonia in respect of the income derived exclusively from Estonian income sources. The taxation of non-residents' income derived in Estonia is influenced by bilateral tax treaties between countries.

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Income from employment

The income of non-residents derived from work or from the provision of services during their stay in Estonia is taxable in Estonia. Income tax is normally withheld and declared by a person making payments.

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Business income

A non-resident business operator pays income tax and social tax on business carried out in Estonia. Business means independent economic or professional activities of a person, the aim of which is to receive income from the production, sale or intermediation of goods, provision of services or other activities, including creative or scientific activity.

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The pension paid to non-residents in Estonia is taxable income. As a rule, income tax on pension is withheld and declared to the Estonian Tax and Customs Board by the payer of the pension. The Estonian pension system is based on three pillars: state pension, mandatory funded pension and supplementary funded pension.

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Gains from transfer of property

Gains from transfer of property is taxable income in Estonia. A non-resident has to declare such income and pay income tax on it.

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Rental income and licence fee

Rental income and licence fees received by a non-resident in Estonia are taxable income subject to income tax in Estonia.

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Deductions from income taxable in Estonia

Non-residents who are residents in other European Economic Area (EEA) member states have the possibility to reduce the amount of taxable income in Estonia by submitting an application for basic exemption to the person who makes payments to them or by submitting the income tax return of an Estonian resident natural person. Non-residents of other countries cannot make deductions from the income taxable in Estonia.

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Declaration and forms

Non-residents have to submit an income tax return in Estonia if they receive business income or gains from the transfer of property in Estonia. In other cases, a withholding agent is required to withhold income tax on the payments made to a non-resident.

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Use of e-services

As a non-resident, you can sign in to the Estonian Tax and Customs Board’s e-services environment and use e-services if you have an authentication tool that has a high assurance level.

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Last updated: 07.09.2022

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