One of the provisions is aimed at better regulation of intragroup loans as one of the methods of concealed distribution of profits. Lending for an unreasonably long period, an unreasonable repayment schedule, the repeated extension of the repayment term or repeatedly increasing the loan amount may suggest that the loan was granted for the purposes of concealed distribution of profit. Therefore, granting a loan with a lower interest value than market conditions would suggest, may result in income tax application on the interest not received on the loan. In the case of a subsidiary granting a loan to a foreign parent company, the total loan amount may become subject to income tax. 

Also, in order to motivate the repayment of the loan, the tax authority may, by the new law, demand proof of ability and intent to repay a loan granted for a period longer than 48 months. The taxable persons are also required to declare the loans they have granted once a quarter and this must be done by all commercial undertakings that have granted loans to related persons.

For further information, please read the article on our Estonian webpage: https://leinonen.ee/news/news-2017/intragroup-loans-can-bring-about-tax-liability