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Estonia - Special considerations for short-term assignments

Estonia - Special considerations for short-term..

Taxation of international executives


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Residency rules

Payroll considerations

Taxable income

Additional considerations

For the purposes of this publication, a short-term assignment is defined as an assignment that lasts for less than 183 calendar days over the period of 12 consecutive months.

Residency rules

Are there special residency considerations for short-term assignments?

A foreign employee will be considered as resident in Estonia if one of the following conditions is met:

  • his/ her place of residence is in Estonia;
  • he/she stays in Estonia for at least 183 days over the course of a period of 12 consecutive calendar months.

A person shall be considered to be a resident as of the date of his or her arrival in Estonia, also half days are counted in as a full day. It is possible, that a person shall be deemed to be resident for one part of the period of taxation and non-resident for the other part of the period of taxation. A special form R must be submitted to the Estonian tax authorities for informing about changes in the natural persons residency.

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 will be applied.

A person shall be deemed to be a resident as of the date of his or her arrival in Estonia.

Payroll consideration

Are there special payroll considerations for short-term assignments?

Non-resident must have a personal code applied from Estonian tax authorities (B code) or Estonian ID-code. Also, the employment must be registered in the employment register with the Estonian Tax and Customs Board.

Taxable income

What income will be taxed during short-term assignments?

If the employee is considered non-resident, only employment income (remuneration) derived from Estonia will be taxed in Estonia. Trips to and from Estonia, when the employee starts and ends the assignment, are tax-free.

Additional considerations

Are there any additional considerations that should be considered before initiating a short-term assignment in Estonia?

Not applicable.

© 2019 KPMG Baltics OÜ, an Estonian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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