Tax & Legal Updates

Latest tax and legal news prepared by our professionals from Tax Department and Law Firm Deloitte Legal

New lease standard may bring additional obligations

IFRS 16 is a new lease standard, which requires lessee to recognize right-of-use assets stipulated in lease contracts on its balance sheet as when signing lease contracts, the lessee gains the right to use the leased assets (assets user rights as immaterial assets) and associated liability arises for payments to lessor for using the asset (liability arises from right to use).

More information:

Monika Peetson, Deloitte Audit, Sworn Auditor,

Krisli Klaarman, Deloitte Advisory, Tax Advisor 

Full article is available HERE.


On 3rd January, a new financial markets regulation MiFID II came into force

The European Union financial markets regulation MiFID II brought new rules to the securities markets, which aim to enhance protection of the investors. The new rules, which are largely transposed into the Estonian law by the Securities Market Act, impose obligations on the  investment service providers. Therefore, MiFID II concerns banks, investment firms, management companies and exchange operators.

More information: Sander Hein, Law Firm Deloitte Legal, Lawyer

Full article is available HERE.


Estonian tax authority released new guidelines 

As of January 2018, the Income Tax Act amendments came into force and the Estonian Tax authority will now have more specific grounds to tax the loans granted by Estonian companies to their parent or sister companies, in cases where circumstances indicate that in substance the loan may be a hidden profit distribution.

New Income Tax Act also includes obligation to declare quarterly information on loans granted to the related parties as well as monthly reporting obligation about hidden profit distribution.

The guidelines are, at the moment, only in Estonian and could be found here.


Tax amendments regarding sole proprietors

The Law on Amendments to the Social Tax Act and the Income Tax Act announced at the end of the year 2017, will create a more favorable tax environment to the sole proprietors (FIE). For example, the maximum limit on the social security contributions required to be paid by sole proprietor is reduced to a factor of 10 times the minimum monthly salary of a tax year; sole proprietors have the right to deduct the cost of entertaining quests on the same basis as businesses; sole proprietors may deduct the amount of expenses exceeding the current period’s business income from the future business income up to nine subsequent tax periods; and the amount of social tax that exceeds the taxable business income will be transferred to the following tax periods.


Estonia ratified tax treaties with Kyrgyz Republic and Japan

Agreements between the Government of the Republic of Estonia and the Government of the Kyrgyz Republic; and between Japan, for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income were ratified in the end of December 2017.


VAT act states a new threshold for mandatory registration as VAT taxable person

As of year 2018, the obligation to register as VAT taxable person arises, when taxable supply carried out by a person exceeds 40,000 euros (until the end of 2017 the threshold was 16,000) as calculated from the beginning of a calendar year. Also, some specifications are made on what is considered as taxable supply. The main reason for the change is to support the business activities of relatively high number of small businesses in Estonia by reducing the administrative burden of preparing and submitting VAT returns. Still, taxpayers may voluntarily register as a VAT liable before exceeding the threshold.


Council of European Union adopts new VAT rules on e-commerce

On 5 December 2017, the Council of the European Union adopted new VAT rules to facilitate e-commerce.

  • As of 2019, simplification measures (the MOSS scheme) will apply to all intra-EU supplies of services. Taxable persons not exceeding an annual total value of EUR 10 000 in connection with supply of e-commerce services may continue to apply the VAT rules of their home country.
  • As of 2021, the one-stop-shop scheme will be extended to distance sale of goods to intra-EU as well as from third countries. Taxable persons not exceeding an annual total value of EUR 10 000 in connection with such supplies may continue to apply the general VAT rules.

“This revamp of the rules will make our VAT system fit for the digital economy", said Toomas Tõniste, Minister for Finance of Estonia.