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Income tax refunds to a non-resident

The Estonian Tax and Customs Board will refund overpaid income tax amounts calculated according to resident natural persons’ income tax returns to non-residents by 1 October (Income Tax Act § 46 (6)).

It is not necessary to submit a separate application for refund of overpaid withheld income tax. The Estonian Tax and Customs Board refunds overpaid income tax calculated according to income tax return to the tax payer’s bank account.

When the refundable amount is transferred to a foreign bank account of the taxable person, the Estonian Tax and Customs Board has the right to deduct the costs of transferring the refundable amount from the refundable amount (Taxation Act § 106 (4)).

In case the income tax was withheld in a larger amount than the tax treaty (convention between Estonia and a foreign state to avoid double taxation of income) allows (for example, a certificate of residence was not presented to the tax authority), then the non-resident may apply for the refund of overpaid income tax according to the tax treaty by submitting the form TM 3 to the Estonian Tax and Customs Board. The part IV is filled in on form TM 3 in this case, it is also possible to fill in an application for refund of overpaid income tax with the same data. Necessary additional documents are added to the application. These additional documents have to confirm the payment of overpaid income tax and the residency of the person (a certificate of tax residency). In case the reduced rate, which results from the tax treaty, is used at the moment of making the payment, then income tax overpayment will not occur and there is no need to fill in the part IV of form TM 3.

The tax authority of the foreign state will confirm the tax residency of the tax payer in the part III of form TM 3.