Taxation of international executives
A foreign employee will be considered as resident in Estonia if one of the following conditions is met:
A person shall be a resident as of the date of their 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 based on 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 their 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?
All information contained in this publication is summarized by KPMG Baltics OÜ, the Estonian member firm affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity, based on based on the Estonian Income Tax Act, Social Tax Act, the Web sites of the Estonian Tax and Customs Board, the Police and Border Guard Board and Ministry of Financial Affairs.
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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.