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More than 1600 people use business account

12 December 2019

The Estonian Tax and Customs Board (ETCB) together with LHV Pank brought for the first time the business account to the Estonian market at the beginning of this year, which facilitates payment of taxes and reporting for private persons engaged in business. As at the beginning of December, 1626 persons were the users of a business account and more than 1.8 million euros have been transferred into the account.

According to the words by Evelin Liivamägi, the head of the Tax Department of ETCB, the business account is the easiest and most favoured way for the correct payment of taxes if employment relationship between private persons is concerned. “ We shall encourage any private person to use this opportunity whereas in this case there is no need to worry about employment registration, financial statements, reports, monthly tax returns or payment of taxes,” added Liivamägi.

By using the business account, the tax rate is 20 per cent from the amount received on the account. If a person’s annual income exceeds 25,000 euros, the amount exceeding it shall be charged by the 40 per cent tax rate.  The business account cannot be used if the remuneration received on the business account exceeds 40,000 euros per calendar year.

For example, Tiiu has a charwoman Mai, a private person whose remuneration has been agreed to 100 euros.  Mai opens for herself a business account with the bank whereto she let to transfer or transfers herself the remuneration in cash received for cleaning up.  Tiiu and Mai confine themselves to the actions they have done, either of them need not submit any tax return. The bank reserves 20 per cent from the 100 euros received for payment of taxes and transfers to ETCB. The tax authority divides this 20 euros into income tax, social tax and contribution to funded pension and the person himself/herself can see the entire reckoning of the business account in the e-MTA. Tiiu’s expenditure for cleaning up is 100 euros and Mai’s income is 80 euros.

In order to open a business account you must be a client of LHV Pank. A contract with client can be concluded and a business account opened with LHV Pank by electronic means on the Internet through the Internet bank of LHV Pank.

Further information about the business account may be retrieved from here.

The development work was financed by the European Regional Development Fund measure ‘Development of public services’.

 

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