A person is a resident if his or her permanent place of residence is in Estonia, or he or she stays in Estonia for at least 183 days in the period of 12 consecutive months. Estonian state public servants who are in foreign services are also residents. A person is deemed to be a resident from the date of his or her arrival in Estonia. A natural person shall inform the tax authority of the circumstances concerning the change of residency and shall fill in Form R (Application form for determination of residency).
Submission of income tax return is obligatory for the following persons:
- sole proprietors (in addition to the basic form of an income tax return (form A) they must submit an income tax return on business income (form E));
- persons who in the period of taxation had shares, votes or rights to the profits of a legal person located in a low tax rate territory (in addition to the basic form of an income tax return the form MM or Annex 1 of the form MM must be submitted, irrespective of the fact whether the referred legal person received any income at all or not);
- persons who received income (incl. dividends) from abroad. Both, income from employment and dividends taxable in Estonia and also income, which in accordance with the international agreements is not taxed in Estonia, must be declared. This applies also in respect of pensioners of the neighbouring countries who live permanently in Estonia and have become Estonian residents;
- persons whose loss upon transfer of securities is bigger than gains derived from transfer of securities in the period of taxation and who wish to deduct the amount by which the loss exceeds the gains from the gains received from transfer of securities in subsequent periods of taxation;
- persons who have made contributions to or disbursements from the investment account referred to in § 172 of the Income Tax Act.
Submission of a tax return is not required, if:
- a person's income is not subject to additional income tax (except some special cases);
- a person's total income did not exceed the basic exemption of 1848 euros;
- a person received only a pension paid by an Act of the state which is a Contracting Party to the European Economic Area Agreement (incl. Estonia), a mandatory funded pension provided for in legislation of such state, or a pension arising from a social security agreement if the amount of a pension did not exceed the increased basic exemption of 2640 euros, or if the prescribed amount of income tax on a pension has been withheld and an additional amount of tax is not required. In the event of increased basic exemption on a pension (2640 euros) the general basic exemption in the amount of 1848 euros will be added;
- a person received only a compensation for an accident at work or an occupational disease which did not exceed 768 euros, or, if the income tax on benefits in the amount prescribed by legislation has been withheld and the payment of any additional amount is not required.
Submission of an income tax return to benefit from tax incentives
- If a person is not obliged to declare his or her income, but he or she wants to have deductions (has paid the training expenses, housing loan interests etc.), then an income tax return must be submitted.
- If a resident natural person of another state of the Contracting Party to the EEA Agreement has received income taxable in Estonia in 2015, then he or she can take into account tax incentives (including the basic exemption) in proportion to the share of the income taxable in Estonia in his or her taxable income for the period of taxation on the following conditions:
- if the person has received at least 75 per cent of his or her total income in Estonia, he or she can use all the deductions provided for in Chapter 4 of the Income Tax Act.
- if the person has received less than 75 per cent of his or her total income in Estonia, he or she can use, as deductions, the basic exemption and the increased basic exemption in the event of pension, in the case the person receives pension payments.
For that purpose he or she has to submit an income tax return for resident natural person.
Source: Estonian Tax Office