Non-resident Taxable Income in Estonia
In Estonia, a non-resident is taxed only on income received from Estonian income sources.
Non-resident income taxation in Estonia is affected by bilateral tax treaties between countries. In general, income tax is withheld when making a payment, and a non-resident does not have to submit an income tax return.
The non-resident needs to declare the income personally, if they benefited from the transfer of property or had business income as a sole proprietor or have a permanent place of business in Estonia as a non-resident.
| Non-resident natural person | Non-resident legal entity (who does not have a permanent place of business in Estonia) |
| labor and service fee | – |
| remuneration of a member of the management or control body | – |
| business income | business income |
| entertainment or athlete’s performance fee in Estonia | entertainment or athlete’s performance fee in Estonia |
| rent and rental income | rent and rental income |
| license fee | license fee |
| interest from a contractual investment fund whose assets consist of real estate | interest from a contractual investment fund whose assets consist of real estate |
| dividend, which is taxed to the payer at a lower tax rate (14/86). | dividends |
| benefit from transfer of property | benefit from transfer of property |
| gambling win | gambling win |
| Insurance benefits paid to a non-resident by the Estonian Health Insurance Fund, the Estonian Unemployment Insurance Fund or a resident insurance company | Insurance benefits paid out by an Estonian resident insurance company to a non-resident |
| pension, scholarship, support, aid | – |
| benefit under the Family Benefits Act | – |
| pension fund payout | – |
| – | insurance benefit |
Application of preferential tax rates of the tax agreement
Taxation of non-resident’s income in Estonia is affected by bilateral agreements between countries that aim to avoid double taxation on income and capital tax and to prevent tax evasion.
Tax exemptions and benefits resulting from the tax treaty apply when the beneficiary is a tax resident in a country that has concluded a tax treaty with Estonia. The taxable person must submit a certificate of residence, approved by a foreign tax authority, to Estonian Tax and Customs Board in form TM3 or a certificate from a foreign tax authority containing the same data.
If the residency certificate has been submitted to the Tax and Customs Board and entered into the Tax and Customs Board database before the declaration is submitted, preferential tax rate resulting from the tax agreement is calculated immediately when the declaration is submitted.
As a rule, the residence certificate of a natural person is valid for 12 months (unless a different period is indicated on the certificate), and during its validity period it can be used for all payments by all payers.
If according to Tax Act the taxes need to be submitted, but tax exemptions and benefits arise from the tax treaty, then the payment must still be declared in Estonia.
Until there is no proof of residence abroad, the Estonian law and income tax rate apply.