Taxation of international executives
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:
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.
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.
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.
Are there any additional considerations that should be considered before initiating a short-term assignment in Estonia?
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