Certificate of tax residency

If you require a certificate of tax residence from Estonia, this product is for you. The certificate can be issued for either a company or an individual and will be signed by an official from Estonia, as well as bear a stamp. Please note that this document serves as a certificate of tax residence for an Estonian company, but the ultimate tax residence will be determined by international treaties aimed at preventing double taxation and fiscal evasion, which Estonia has concluded.

NATURAL PERSONS

A natural person is resident if one of the conditions is met:

the place of residence is in Estonia

• the residence time in Estonia is at least 183 days per year

 

LEGAL PERSONS

The residency status of a legal person in Estonia is determined by the place of registration of the company

§ 6. Resident (1) A natural person is a resident if his or her place of residence is in Estonia or if he or she stays in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months. A person shall be deemed to be a resident as of the date of his or her arrival in Estonia. Estonian diplomats who are in foreign service are also residents. A resident natural person shall pay income tax on all income derived by him or her in Estonia and outside Estonia, regardless of whether the income is listed in §§ 13–22 or not. [RT I, 06.07.2012, 1 – entry into force 01.04.2013]

(2) A legal person is a resident if it is established pursuant to Estonian law. European public limited companies (SE) and European associations (SCE) whose seat is registered in Estonia are also residents. A resident legal person shall pay income tax on the objects of taxation prescribed in §§ 48–52 and withhold income tax from payments listed in § 41.

Legal basis here: Estonian Income Tax Act. Riigi Teataja (State Gazette) – https://www.riigiteataja.ee/en/eli/520122021005/consolide

ASK ABOUT TAX RESIDENCY

If you’re planning to set up a company in Estonia or already have one, you might be wondering about tax residency. In this blog post, we’ll answer some common questions about tax residency and provide some helpful information.

DOES THE E-RESIDENCE CARD AFFECT MY TAX RESIDENCE?

The e-Residence card is a document that allows you to sign an electronic signature and correctly identify when setting up a company or operating a bank account in Estonia. However, it has no effect on your tax residency. Thanks to the e-Residence card, you have access to the Estonian market, but it does not impact your tax obligations.

CAN I GET THE CERTIFICATE OF TAX RESIDENCY SIGNED AND STAMPED BY REVENUE?

Yes, you can order a certificate of tax residency with the official stamp and signature. This is useful when making payments to non-residents, such as avoiding paying withholding tax in other countries. We offer this service, so please contact us if you need a certificate of tax residency.

WHICH TAXES ARE PAID BY NON-RESIDENTS IN ESTONIA?

Non-residents in Estonia pay taxes only on remuneration obtained from sources located in Estonia. For example, if the workplace is in Estonia, the non-resident has a limited tax liability in Estonia and unlimited tax liability in the country where they are a resident, such as in Poland or Germany.

DIRECTOR’S FEE FOR NON-RESIDENT

Director’s fee is taxed in Estonia, regardless of whether you are a resident or non-resident. You usually need to pay income tax in Estonia and social securities depending on your employment status. However, if you have other functions in other countries, you can present an A-1 certificate and be exempt from social security.

COMPANY HAS TAX RESIDENCY IN BOTH COUNTRIES

It may happen that a limited company (legal entity) will have a tax residency not only in Estonia, but also in another country. In such cases, agreements on the avoidance of double taxation resolve the conflict of tax residency, particularly Article 4.

I WILL CHANGE MY TAX RESIDENCY AS A NATURAL PERSON – WHAT TO DO?

If you’re changing your tax residency or leaving the country as a natural person, you need to file the “R” form and send it to EMTA (Revenue). This notification to the tax authorities is mandatory.

FEE FOR CERTIFICATE OF RESIDENCE

Please note that non-residents in Estonia have a limited tax liability, and only Estonian-source income is taxed. Therefore, if a person is a resident of both Estonia and another country, their status is determined according to the provisions of the international agreement between the two countries. If the residency prescribed on the basis of an international agreement differs from the residency prescribed pursuant to the Estonian Income Tax Act, the provisions of the international agreement apply.

NB! The foreign tax authorities could determine PE – permanent establishment – to be in their country. If the Estonian tax board recognizes during control that an Estonian company created by an e-resident is operating in a foreign country and should pay taxes there, EMTA will share that information with the foreign country’s tax authorities.

Not every business model is suitable for an Estonian company. Our employees can advise you on how to minimize international taxation risks.

We hope this blog post helps you better understand tax residency in Estonia. If you have any further questions or need assistance with tax matters, feel free to contact us.

List of countries with which Estonia has signed agreements on taxation: