The reimbursement of public transport fare used for commuting between an employee’s home and workplace is not taxed as a fringe benefit.
A resident’s income received from abroad, including pension, is subject to the deductions from taxable income equivalent received in Estonia. Deductions can be made in full even if most of the income is received from a foreign country.
From the amendments to the Taxation Act and the Income Tax Act adopted in November 2018: the income tax exemption for deferred tax debt interest (excluding tax rulings) and the right of the Tax and Customs Board in exceptional cases to reduce the interest calculated on the deferred tax debt by 50% retroactively from the day the tax debt was incurred will enter into force on January 1, 2020. From the next year, the interest amounts will be rounded to the nearest euro. Currently, it is accurate to the cent.
This concerns Estonian entrepreneurs wanting to transfer their assets located in Estonia to a permanent establishment in another country. This also applies in a situation wherein assets are transferred from a permanent establishment in Estonia (such as a branch or a representative office) to a foreign head office. Income tax must be paid on the transfer of property based on the market value of the property.
Taxation rules for the cross-border turnover of goods are simplified if it is a call-of stock, i.e. the goods are delivered to a warehouse in another EU Member State in agreement with the buyer until the buyer buys them from the warehouse. According to the simplified scheme, the company will not be subject to any tax or reporting obligation when taking call-of stock to another Member State. The transaction is declared, and the tax liability arises only when the goods are sold to the buyer in the seller's country of residence.
Uniform rules for the taxation of chain transactions will be set, as there have been different rules in different Member States until now. The tax liability of companies does not change with this, rather it helps to the prevent double taxation or non-taxation that may occur due to different practices. If one good is transferred several times in a row, in order to apply the 0% VAT rate, the good must be transferred to a dealer who delivers it directly to the last purchaser located in another Member State of the European Union.
From July 1, 2020, the previous 10-day paternity leave period will be extended to 30 days. Another change is that the Social Insurance Board pays the additional benefit directly to the parent’s bank account. Previously, it was done through the employer. The period a father can use the paternal leave also changes: from now on, paternity leave can be used 30 days before the expected birth of the child and/or until the child turns 3 years old. This leave can be taken all at once or in several parts. Previously, only fathers who worked on the basis of an employment contract had the right to paternity leave, but now all fathers have the opportunity to use paternity leave.
Temporary employment during the period of registration as unemployed, i.e. a workbit, means an employment period overlapping the period of registration as unemployed. From 1 September 2020, it is possible for people registered as unemployed to be temporarily employed while looking for a full-time job, without their registration as unemployed terminating due to employment. This allows jobseekers to be professionally active until they find a new full-time job.
Conditions of temporary employment (established in section 42 of the Labour Market Services and Benefits Act):
If a natural person receives an income tax return, it can now be donated to organizations with income tax incentives (non-profit organizations, charities or religious associations) if desired. Previously, it was only possible to send a tax return to your bank account or keep it in the Tax and Customs Board account as a tax prepayment.
Based on an employee-submitted application in October 2020, the payment of the 2% of their earned salary was suspended from payments made since December 1, 2020. The temporary suspension of the 2% payment will be enforced from December 1, 2020 until August 31, 2021. For those who continue their 2% payments while the 4% from social tax is not paid into the second pillar, the 4% will be compensated at a later time. During 2023 to 2024, the state will make an additional contribution to the second pillar of the funded pension for eligible individuals. The size of the compensation depends on how much the individual contributed to the second pillar during the temporary suspension of contributions: everyone is paid twice as much as they contributed during the said period into their second pillar.
From Aug 1, 2020, an amendment to the Commercial Code entered into force, which allows, in certain cases, to sell shares of a private limited company without a notary approval.
It was previously possible to sell the shares that were registered in the Estonian Central Register of Securities without notary, but of August 1, 2020, it is also possible to transfer shares that are not registered in the Central Register of Securities without a notary. However, this is only allowed if three criteria are met: