Deductions from income taxable in Estonia

Non-residents who are residents in another European Economic Area (EEA) member state have the possibility to reduce the amount of taxable income in Estonia 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.

Withholding of unemployment insurance premium from the income of non-residents

Unemployment insurance premiums withheld pursuant to the Unemployment Insurance Act shall be deducted from the income received by a non-resident natural person during a period of taxation in case it was compulsory to pay the unemployment insurance premium in Estonia. However, when withholding income tax, the payer cannot deduct basic exemption from a non-resident's income taxable in Estonia.

Residents of Contracting States of the European Economic Area

If a natural person who is a resident in another European Economic Area (EEA) member state has received taxable income in Estonia, he or she can make deductions from his or her income taxable in Estonia on the same grounds as a resident of Estonia.

In order to make deductions, it is necessary to submit to the Estonian Tax and Customs Board the income tax return of a resident natural person, where income received outside Estonia must also be shown.

In order to prove the income received abroad, a certificate from the tax authority of the country of residence must be submitted to the Esotnian Tax and Customs Board. If this certificate does not reflect all the taxable income, it is also necessary to provide a certificate from the tax authority of the country where the income was derived.

Income earned abroad is not taxed in Estonia, but this affects the amount of basic exemption. You can read more about basic exemption at the following links:

Contracting States of the European Economic Area

  • 28 Member States of the European Union
  • Iceland
  • Liechtenstein
  • Norway

Residents of other countries

Non-residents who are residents in countries other than the EEA Contracting States (e.g. United States of America, Canada, Ukraine, Russia etc.) cannot submit the income tax return of a resident natural person in Estonia or make deductions from the income taxable in Estonia.

If income tax has been withheld at the correct rate provided for in the Income Tax Act or tax treaty, a non-resident receiver of income is not required to submit the income tax return in Estonia.

If income tax was not withheld at the rate provided for in the Income Tax Act or tax treaty, a non-resident who is not resident in an EEA Contracting State has to submit a non-resident’s income tax return Form A1 (income from which income tax has not been withheld), V1 (gains from transfer of property) or E1 (business income).

Last updated: 19.11.2021

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