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Forgiveness of tax arrears

Tax arrears are taxes that are due but unpaid and interest thereon or customs duties due but unpaid and interest thereon. Penalty payments, fines, compensation claims and the like are not deemed to be tax arrears.

It is important to keep in mind that the tax authority has no right of discretion for deciding on any reduction in tax arrears upon agreement with the taxable person.

The tax authority may, on the basis of a justified written application by a legal entity or a justified exception, only forgive tax arrears at its own initiative on the following grounds:

  1. if the collection of such is unfair due to circumstances independent of the person, including force majeure;
  2. income tax arrears arose from the disposal of the taxable person’s assets held as security for a third person’s debt in enforcement proceedings or bankruptcy proceedings.

Tax forgiveness is regulated by subsection 114 (3) of the Taxation Act and §§ 5 and 51 of the Procedure for Write-off and Forgiveness of Tax Arrears adopted under Regulation No 61 of 2 May 2002 of the Minister of Finance.

Unfairness of tax arrears collection

For the forgiveness of tax arrears on grounds of unfairness of collection it is important to have some exceptional or unforeseen circumstance that would put the applicant in an unequal situation upon collection compared to other taxable persons (for example, the cases of international taxation).

In an application for forgiveness of tax arrears, the applicant has to:

  1. present circumstances that put the applicant into an unfair situation in this specific situation compared to other taxable persons, unless such circumstances arise from provisions of the law applicable to other similar taxable persons;
  2. prove that such circumstances did not arise from the applicant’s intent, circumstances were unavoidable and the applicant was unable to eliminate them;
  3. submit all facts known to the applicant regarding such circumstances and evidence for confirming them;
  4. submit data regarding the fact that the applicant’s conduct in this matter has been compliant with applicable law.

Please send an application in the Estonian language including evidence and additional materials to the nearest service bureau or send it digitally signed to the e-mail address emta@emta.ee.

The tax authority will issue a decision within 30 days of receiving the application. If we ask you for additional explanations and/or documents as part of the tax arrears forgiveness procedure, we will issue a decision within 30 days of receiving such additional explanations and/or documents.

Income tax arrears arising from the disposal of the taxable person’s assets held as security for a third person’s debt in enforcement proceedings or bankruptcy proceedings

The objective of tax arrears forgiveness on such grounds is to enable the release of a third party pledgor from tax obligations when assets they own are sold in enforcement proceedings or bankruptcy proceedings to cover another party’s debt. In such case the taxation of a person that lost its asset against its will may be unfair and the resulting debt irrecoverable.

Please send an application in the Estonian language including evidence and additional materials to the nearest service bureau or send it digitally signed to the e-mail address emta@emta.ee.

The tax authority will issue a decision within 30 days of receiving the application. If we ask you for additional explanations and/or documents as part of the tax arrears forgiveness procedure, we will issue a decision within 30 days of receiving such additional explanations and/or documents.

Additional information


Additional information on the forgiveness of tax arrears can be obtained from the contact person of the Debt Processing Division of the Services Department:
Anu Pillesson, anu.pillesson@emta.ee, +372 676 2052

 
07.10.2019