[vc_row][vc_column][vc_column_text]Before the entry into force of the Estonian regulation governing crowdfunding (collective financing), the authorities were concerned that there could be an avalanche of permit applications which would take a whole year to review. However, now there is concern that many companies providing crowdfunding services could miss out on the deadline to obtain a crowdfunding permit and would have to either stop or suspend their services.
On 7 October 2020, the European Parliament adopted the long-overdue Regulation 2020/1507 (EU) on the regulation of crowdfunding (“Regulation”).
In line with the rationale for the Regulation, crowdfunding is increasingly an alternative means of financing for startups and small and medium-sized enterprises. Crowdfunding is considered a good opportunity to improve the availability of financing, and it has also become one of the opportunities for financing the entrepreneurial activities of individuals and legal entities. Such financing is provided via online platforms, and funded projects usually attract a large number of private and corporate investors. This includes startups that often raise the necessary funding through crowdfunding.
In December 2021, the provisions of the Securities Market Act that apply to crowdfunding service providers within the meaning of the Regulation entered into force. These provisions foresee that crowdfunding service providers will be under the supervision of the Estonian Financial Supervisory Authority (FSA).
On 5 November 2021, FSA held an information day for crowdfunding service providers and explained in detail the issues that are related to applying for permit to provide crowdfunding services and supervision matters. These materials are available as a video recording on the FSA website.
In order to ensure consistent application of the Regulation, including the provision of adequate investor and consumer protection, the Regulation gives the European Securities and Financial Markets Authority (ESMA) and the European Banking Supervision Authority (EBA) the mandate (authorization) to develop regulatory technical standards and submit them to the European Commission.
The problem is that the Regulation contains quite a number of the regulatory technical standards that ESMA and EBA are required to draft and which are important in the context of an application for an operating permit. However, what happened was that ESMA and EBA were unable to develop all the required regulatory technical standards. This situation is now causing problems for both permit applicants and regulators: on the one hand, the situation is specific and clear – crowdfunding service providers must be regulated and supervised and if they fail to do so within the time frame specified in the Regulation, they may be prohibited from providing the service. On the other hand, a number of very important components are still missing that enable the regulators to deal with applications for a permit to operate with complete confidence and, if the required data and information are sufficient, to grant a license to operate.
For obvious reasons, this situation creates uncertainty and may become a direct obstacle to the provision of crowdfunding services both in Estonia and in the European Union as a whole. In the light of the foregoing, FSA has developed an approach that allows companies to apply for a permit under the current legal situation.
According to the Regulation, the transition period is until 10 November 2022. Until then, crowdfunding providers may continue to provide the crowdfunding service without a permit.
The procedure for processing a crowdfunding permit application is similar to that for other areas of the financial sector. An entrepreneur applying for a crowdfunding permit must collect the required information and submit it with the application to FSA. One important difference is the timing of the so-called preliminary assessment of the application.
In other words, FSA must, within 25 working days of receiving a formal application, assess the completeness of the application, including whether sufficient information has been provided. Within the specified period, FSA must assess the compliance of the form and content of the application with the requirements established by law. If the application or the documents attached to it do not comply with the current requirements, contain significant shortcomings in form or content, FSA shall assign an additional period for the applicant to remedy the shortcomings.
Thus, at the initial stage of the consideration of the application, it is possible that 25 working days have elapsed since the receipt of the application, FSA has identified shortcomings, and sets a deadline for their elimination. An additional period of 10–20 working days may be required to remedy the deficiencies, depending on the content of the deficiencies being remedied. It is also possible that such an additional term may be imposed more than once.
In addition, FSA should have time to review the responses. In general, it is possible that 25–50 (and even more) working days may pass before the beginning of the process of consideration of the application, which in fact is almost two calendar months.
If FSA does not return the application and begins the review process, the Regulation sets the time limit for the proceedings at three months, within which FSA must decide whether the potential crowdfunding service provider meets all requirements. The decision should take into account, among other things, the nature, scope and complexity of the potential crowdfunding service, as well as the suitability and law-abidingness of managers and owners.
Thus, during the process of consideration of an application, it is possible that the total duration of the procedure may be on average five to six calendar months or even longer. It may happen that the application for permission will not receive a positive decision for the first time. Given that it is no longer possible to work without permission after 10 November, crowdfunding service providers must begin to act and file a correct and eligible application.
Prior to the entry into force of the crowdfunding regulation, FSA reviewed the potential market for crowdfunding services and identified some 20 potential business entities as candidates for authorization. Considering that today applicants of the permission can be counted on fingers of one hand, it is possible that many of them didn’t have so much time to submit the application. It is also worth noting that activities without permits are governed by penitentiary law and are punishable, so the obligation to apply for a permit must be taken seriously. It would be naïve to hope that the Commission would extend the deadline set out in the Regulation – this is unlikely, especially since a certain time delay does not apply in all cases.
Currently, more than 400 Estonian companies are providing crowdfunding services. The experts of LKS Consult OÜ will assist you in setting up your company in Estonia and can support you in preparing documents for filing an application and obtaining permission for crowdfunding activities in Estonia.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]The free movement of capital is one of the four fundamental freedoms of the single market of the European Union, and in order to safeguard these freedoms, it is necessary to simplify the rules and remove the restrictions that are an obstacle to the movement of capital between EU member states.
Access to capital ensures economic development, and the main sources of capital are banks. Excessive reliance of financial markets on banking activities does not benefit the financial system, therefore it is important to develop other functions of the financial market. The financial market must be diverse and develop in a balanced manner. Investment and pension funds are one of the largest non-bank financial intermediaries, and their development ensures a more efficient functioning of the financial market.
To this end, on 18 May 2022 the Estonian Parliament adopted the amendment to the Investment Funds Act and related acts, which for the most part entered into force on 3 June 2022.
The amended act simplifies the activities of investment funds in other EU countries.
The purpose of these amendments was to simplify the marketing of investment funds to investors from different EU member states. The main objective of the law is to improve the functioning of the single market for EU investment funds, which is useful for investors, as they will have easier access to investment funds of other EU member states.
According to statistics, 70% of the assets held by investment funds are offered in the fund’s countries of origin, that is, the funds are not interested in placing their funds in other EU countries than the country of origin. The main reason why funds do not want to offer their product outside the country of origin is excessive regulation.
The new law removes restrictions and simplifies activities in other countries. For example, under the amended law, alternative funds registered in the EU (i.e. venture capital funds intended for professional investors) that offer a product in another EU member state no longer need to have a representative, which is expensive, and before entering the market, the fund can assess its marketing potential in the market.
This means that it will be easier for foreign funds to gauge the interest of local professional investors in the investment idea or strategy of the fund manager before offering shares, stocks, or units in these markets.
Today’s stock market in Estonia is not yet diverse. The new law makes it easier for funds established in other EU countries to enter the Estonian market and offer Estonian investors diversified investment opportunities. Since the law is based on EU norms, Estonian funds are now able to offer their products more easily in other countries of the European Union.
LKS Consult OÜ will assist you in registering a small alternative fund in Estonia. In the field of financial investment structures, we support our clients at all stages of their activity. Each new cooperation begins with a consultation, where the basic principles are discussed and the mechanism of work of the future company is determined. The next step is to prepare a legal decision on the fund’s activity and draw up step-by-step instructions for registering a small alternative fund in Estonia. Contact us and get an offer today.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]In this article, legal experts of LKS Consult OÜ give an overview of the information that you need to know before entering into a notarized contract in Estonia.
A notary in Estonia is a holder of office in public law, an independent official to whom the state has delegated the duty of ensuring the security of legal relationships and prevention of legal disputes. The main field of activity of notaries is the certification of transactions in civil matters on the request of natural persons and legal entities.
Notarization in Estonia enhances the protection of individuals’ rights and confidence in legal matters. The purpose of certification is to ensure the stability of relations between persons, and thus to prevent possible subsequent legal disputes. Below is a brief description of the work of notaries given on the website of the Estonian Chamber of Notaries.
Notary’s obligation to clarify
There are unfortunately cases when, despite the participation of a notary in entering into a contract, a party subsequently suffers damage precisely because of the clauses stipulated in the contract. In general, it can be assumed that when entering into a notarized contract, the parties understand and are clear about all their rights and obligations, since when concluding a notarized contract, the notary has the obligation to clarify. However, how extensive is the duty of a notary to clarify, and what should be considered before entering into a notarized contract?
Subsection 18 (1) of the Notaries Act stipulates that the notary must explain to the parties the meaning of the transaction, its legal consequences and various possibilities of concluding the transaction. At the same time, the notary must ensure that there are no mistakes and doubts about the transaction, and that the interests of an inexperienced and unaware participant are not infringed. Subsection 2 of the same article says that if the notary has doubts about the compliance of the transaction with the law and the actual will of the participants, the notary must discuss it with the participants.
The Supreme Court of Estonia (in its decision No. 3-2-1-17-15) explained that during the certification of the transaction, the notary is obliged to inform the parties, including about the consequences of the requested transaction, and to warn them about relevant legal risks. Also, the notary must in an unbiased form explain the possibilities how to achieve the result that best corresponds to the will of the participants. As the competent state official, it is the duty of the notary to ensure that the content of the transaction can be clearly and unambiguously determined at a later date. At the same time, the Supreme Court noted that the purpose of the requirement for notarization of the transaction can be both the protection of the parties to the transaction from ill-considered actions, that is, a preventive function, and their consulting.
Thus, the obligation of the notary to explain, which is implicit in the law, is quite broad and should include, among other things, a warning to the parties if the contract seems ill-conceived to the notary. The foregoing shall ensure that the parties enter into only such contracts, the contents and potential risks of which are well known to them. Unfortunately, case law shows that this is not always the case.
Ostensible transaction
However, the above is not the only reason why a notarized contract does not provide the parties with the protection one would hope for. In Estonia, it is still common to enter into so-called ostensible transactions. An ostensible transaction is a transaction in relation to which the parties have agreed that the manifestations of intention that they made to carry out that transaction do not have the legal consequences corresponding to the volition that was manifested – for the reason that the parties intend to create an impression of the transaction’s existence, or to conceal the transaction they actually intend to carry out.
In other words, a transaction is ostensible if a contract with one content is deliberately entered into, which for some reason is more beneficial to the parties, but in fact the parties are referring to another transaction.
The type of transaction that is most often ostensible is purchase and sale transactions. With the purpose of avoiding the payment of income tax on the income from the sale, often a gift agreement is concluded with a notary. At first glance, this may seem like a good plan, but in the event of a dispute, it will be very difficult for the injured party to prove what the real will of the parties was.
Without knowing the actual goals and intentions of the parties to the transaction, the notary cannot advise the parties when exercising their will, warn about the risks arising from the current law, explain the consequences of the requested transaction or prove the content of the will. Therefore, it is important that the parties disclose reliable information when notarizing the transaction and do not hide its actual content. In that case, the rights of the parties would be better protected in possible legal proceedings.
Conclusion
The duty of a notary to provide clarifications is quite broad and detailed, but nevertheless it should not be assumed that a notarized contract will protect in the event of any dispute. It is always worth making sure that all clauses of the contract are understood, and if necessary, clarify unclear places. It is also worth being honest with a public notary and disclosing only reliable information to ensure the best protection of your rights.
If you are interested in a notarial transaction, contact the representatives of the LKS Consult OÜ , and we will help you to book time to a notary and support you throughout the process.
There are now more Estonian e-residents than the population of the city of Tartu, according to the communication department of the E-residence program. Estonia has by now granted e-residence to 94,892 people, which is more than there are residents in Tartu, Estonia’s second-largest city.
“The community of Estonian e-residents is truly global and unites nationals of 176 countries, each of whom is an ambassador of Estonia. Today, the number of e-residents is already slightly larger than the population of Tartu, meaning that e-residents form Estonia’s second-largest community. This special club represents a fascinating and unique diaspora, and shares similar values with Estonia’s international university town Tartu,” said Lauri Haav, director of the E-residence program. “Just as those who were born in Tartu or studied at Tartu University always remain connected to Tartu, also e-residents always carry a part of Estonia with them.”
In its eight years of activities, the e-residency program has brought Estonia more than 100 million euros in tax revenue and has become one of the foundations for Estonia’s international reputation as an innovative country. According to Haav, Estonia’s liberal economic environment, low level of bureaucracy and e-services are taken for granted by Estonians, but they continue to be unique in the world.
In line with the growth strategy approved this spring, the goal of e-residency program is that an increasing number of e-residents start their own business.
“Our main goal is not only to increase the number of e-residents, but to create functioning, tax-paying enterprises that create jobs,” added Haav. “Now we are focused on the promotion of opportunities of e-residency in Germany, Spain, and UK. Also, more and more Ukrainians find us as well. Together with the regulator, we also pay close attention to the background and motives of people applying for e-residency— only honest people engaged in transparent business are welcome.”
Currently, almost a third of e-residents register business in Estonia. In total, e-residents have established more than 22,000 companies with a total turnover of more than 10 billion euros. Every year, a fifth of all new companies and 28% of startups are set up with the participation of e-residents. E-resident companies have created more than 3,600 jobs in Estonia.
The total direct economic impact of the e-residency program on the Estonian state (tax revenues and state duties) now stands at more than 114 million euros. As a result of the successful implementation of the growth strategy of the e-residency program, the program’s total direct contribution to the Estonian treasury will increase by another quarter of a billion euros by the end of 2025. In addition, the program brings indirect income to the state also through the improvement of Estonia’s international reputation, as well as the growth in the number of Estonian companies serving e-residents and investments. In 2021, the direct economic income from the e-residency program for the state was estimated at 35.2 million euros.
E-residency contributes to strengthening Estonia’s reputation as an innovative digital country. During the entire history of the program, its coverage of Estonia in the international media has been valued at 385 million euros.
Regardless of whether you are already an Estonian e-resident or just decided to apply for an e-resident card, LKS Consult OÜ will help you to establish your company in Estonia. We also provide private tax consultation for non-residents when declaring income in Estonia. You can contact our specialist and get a quote as soon as possible.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]From 1 October 2022, data of the e-Business Register, Estonian commercial register, will be available for free.
Previously, in order to view the data held in the e-Business Register, it was necessary to pay a fee when one requested data about companies, non-profit organizations, foundations, state and municipal institutions.
According to the Minister of Justice, free provision of data will help to make the business sector more transparent and innovative. “For the development of the information society, free access to high-quality data is necessary, first of all, to those that are at the disposal of the state. The availability of information helps to ensure the transparency of the economy and creates the prerequisites for the development of intellectual services based on data”, Minister of Justice Lea Danilson-Järg explained. “A transparent business environment means that the consumer knows whose services and products they are consuming, and entrepreneurs can explore the history of the cooperation partner when establishing business ties. The transparency of the economy is in the interest of society as a whole.”
Each Estonian company will also be able to verify the accuracy of its data entered in the e-Business Register and, if necessary, correct it. In particular, users are advised to check that their personal contact details — telephone number, email address or home address — that they don’t wish to disclose publicly are not entered as company contacts.
The e-Business Register will charge a fee for requesting data about non-profit organizations, as they may contain special types of personal information that are subject to reuse restrictions.
The staff of the LKS Consult OÜ will be happy to enter corrections in the data of your company in the e- Business Register, as well as help with the establishment of your company in Estonia as soon as possible.[/vc_column_text][/vc_column][/vc_row]
[vc_row height=”small” css=”%7B%22default%22%3A%7B%22margin-bottom%22%3A%220%22%2C%22padding-bottom%22%3A%220%22%7D%7D”][vc_column][vc_column_text]Today, Estonia has one of the most convenient and profitable business taxation systems in the world. The state’s active support of small businesses has made Estonia a European centre of entrepreneurship and startup projects. All business processes related to the ownership of an Estonian company (company registration, filing of declarations, communication with government authorities) can be carried out online. Tax and Customs Department is responsible for taxes in Estonia.
Below is an overview of the rates of taxes, payments, and excise taxes that will be in effect in Estonia in 2023.
Tax rates in Estonia in 2023 will remain the same as in 2022, and this can be considered a great achievement of the Estonian government, since in most other Euro countries tax rates will be increased due to the increased level of inflation.[/vc_column_text][/vc_column][/vc_row][vc_row height=”auto” css=”%7B%22default%22%3A%7B%22margin-top%22%3A%220%22%2C%22padding-top%22%3A%220%22%7D%7D”][vc_column css=”%7B%22default%22%3A%7B%22margin-top%22%3A%220%22%2C%22padding-top%22%3A%220%22%7D%7D”][vc_column_text css=”%7B%22default%22%3A%7B%22margin-top%22%3A%220%22%2C%22padding-top%22%3A%220%22%7D%7D”]
Turnover tax
Turnover tax rates: 20%, 9% and 0%
Tax rate 0%
In accordance with the Law on Turnover Tax, turnover tax is not levied on the turnover of the following goods and services of a social nature:
All-embracing postal service
Health care service*
Services provided by a non-profit association to its members free of charge or for a membership fee
Social service*
A shelter service related to the protection of children and adolescents
Education in the field of primary, basic, vocational, secondary or higher education
transportation of sick, wounded persons or persons with disabilities in a specially adapted vehicle*
Insurance service
Provision of an immovable thing or part of it for rent or lease*
Immovable things or part of them*
Securities*
Lottery tickets and gambling organization*
Investment gold*
Products, the acquisition of which did not have the right to deduct the input turnover tax*
Financial services (the full list can be found with our consultant)
* The detailed conditions of non-taxable turnover can be found out from our consultant
Tax rate 9%
The turnover tax rate is 9 percent of the taxable value of the following goods and services:
Books and educational literature in both paper and electronic form*
Medicines included in the list of medicines established by the decree of the minister responsible for this area
Accommodation or accommodation with breakfast
* The detailed conditions for applying the 9% rate can be found out from our consultant
Tax rate 20%
Services and goods that are not included in the list of non-taxable turnover and subject to a rate of 9% are taxed at a rate of 20%
Before reaching a turnover of 40,000 euros from the beginning of a calendar year, the company is not required to register as a taxpayer, but it can do so voluntarily.
Income tax
Income tax rates: 20%; 14%, 10%, 7%, 0%, 20/80, and 14/86
Tax rate 20%
It applies to an individual – both a resident and a non-resident, who receives income subject to taxation.
The 20% tax rate also applies to a non-resident legal entity that does not have a permanent place of business in Estonia.
The amount of income of an individual that is not subject to income tax depends on the amount of his or her income, and will reach 654 euros per month from 2023.
Tax rate 14%
In accordance with the Income Tax Law, it is applied to advance payments of credit institutions
Tax rate 10%
It is applied to payments to individuals – owners of investment pension account units who have reached the age of old-age pension or will reach it within five years.
Tax rate 7%
In accordance with the Income Tax Law, the 7% tax rate is applied to regularly paid dividends.
If dividends are paid to a non-resident individual, then in case of application of a double taxation treaty, the income tax withholding rate specified in the agreement should be applied if it is less than 7%.
If an Estonian commercial partnership pays dividends to an individual whom it taxed at the rate of 14/86, then the payer already withholds 7% of income tax from the payment of dividends, and the individual no longer must pay income tax on dividends.
Tax rate 0%
It is applied to remuneration for the work of a member of the ship’s crew for work on the ship.
Tax rate 20/80
It is applied to resident legal entities and non-resident legal entities whose place of business is Estonia, when making the following payments:
Dividends
Special benefits*
Gifts
Donations
Meal and entertainment expenses
Expenses not related to business activities, etc.
You can find out the full list of payments from our consultant.
Tax rate 14/86
It is applied to regularly paid dividends to a resident legal entity or a non-resident legal entity whose permanent place of business is Estonia.
Simplified taxation of entrepreneurial income
If an individual opens an entrepreneurial account, he or she has the opportunity to fulfil his tax obligation on the basis of the Law on Simplified Taxation of Entrepreneurial Income.
The entrepreneurial income tax rate is:
20% on the amount of income up to 25,000 Euros
40% on the amount of income above 25,000 Euros
An individual who has an entrepreneurial account is not required to register as an entrepreneur and keep records of income and expenses.
In Estonia, this opportunity is provided by the LHV Bank.
Learn the pros and cons of an entrepreneurial account from our consultants.
Social tax
Social tax rate 33%
The obligation to pay social tax arises for the following persons:
A resident legal entity
An individual
A non-resident who has a permanent place of business in Estonia
An individual–entrepreneur
The monthly rate, which is the basis for calculating the minimum social tax obligation, is 584 euros, which implies a minimum social tax obligation of 192.72 euros per month.
An individual-entrepreneur pays social tax per year starting from at least 12 times the monthly social tax rate (584 euros).
According to Article 4 of the Law on Social Tax, social tax is paid by:
1) A resident legal entity;
2) An individual;
3) A non-resident who has a permanent place of business in Estonia or who makes payments specified in paragraph 1 of Article 2 of the Social Tax Law;
4) An institution of the state, municipality or city;
5) the state, municipality or city in cases specified in Article 6 of the Law on Social Tax.
Unemployment insurance payments
The unemployment insurance payment rate in 2023 will be 1.6% for an employee and 0.8% for an employer.
Contribution to the funded pension
The funded pension contribution rate is 2%.
The funded pension taxation payment applies to residents of Estonia who are obliged or voluntarily joined the second stage. Payment is made by withholding the payment amount from the employee’s payment amount by the employer.
From 2021, it is possible to apply for suspension of contributions.
The salary of non-residents of Estonia is not subject to the funded pension payment.
Also, in Estonia there are such taxes as:
Land tax
Advertising tax;
Tax on road or street closures;
Motor vehicle tax;
Animal welfare tax;
Entertainment tax;
Parking fee.
Payment for the use of the environment
You can find out more about the rates and conditions from our consultant
Excise taxes
Estonia has established excise taxes on alcohol, tobacco products, fuel, and electricity, as well as on packaging.
It is planned to increase the excise tax on tobacco and tobacco products by 5% in 2023.
According to the law on Excise Taxes on alcohol, tobacco, fuel and electricity, reduced excise rates on electricity and certain types of fuel will be valid until May 1, 2023.
Land tax
The land tax is paid by the owner of the land or the user of the land in the cases specified in Article 10 of the Law on Land Tax.
The amount of land tax depends on the current local government land tax rate and the land value.
The tax rate is set by the Local Government Council no later than January 31 of a tax year, and the land tax rates are published on the website of the Tax and Customs Department.
The land tax rate is 0.1–2.5% of the taxable value of land per year. The land tax rate for lands used for growing agricultural products of natural meadows/pastures is 0.1–2.0% of the taxable value of the land per year. The Tax and Customs Department calculates the land tax and sends you a notice of the tax that should be paid to the department. If the annual amount of land tax does not exceed 64 euros, then the land tax should be paid in the form of a one-time payment by March 31. If the tax amount exceeds 64 euros, then by March 31, at least half of the tax amount should be paid, but not less than 64 euros. The remaining amount should be paid by October 1.
Heavy vehicle tax
Tax on trucks is levied on goods intended for the transportation of goods:
1) A truck or a vehicle with a gross weight of 12 tons or more registered in the road register, with the exception of the truck specified in paragraph 2) of this section;
2) A train of vehicles with a registered or gross weight of 12 tons or more, consisting of a truck and one or more trailers, whose truck is registered in the road register.
The basis for calculating the tax is the register weight, the number of axles and the type of suspension of the driving axle. The tax rates are given in the appendix to the law.
The tax period for the tax on heavy vehicles is a quarter, and the tax should be paid to the Tax and Customs Department by the 15th day of the first month of the quarter.
The accountants and tax consultants of LKS Consult OÜ will be happy to advise you on tax issues related to your Estonian company and provide accounting services in Estonia.[/vc_column_text][/vc_column][/vc_row][vc_row css=”%7B%22default%22%3A%7B%22margin-top%22%3A%2220px%22%7D%7D”][vc_column][us_btn label=”contact us” link=”url:https%3A%2F%2Fwww.estonia-company.ee%2Fcontacts%2F” align=”center”][/vc_column][/vc_row][vc_row][vc_column][us_page_block id=”10347″][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]LKS Consult OÜ offers its customers the use of professional accounting software adapted for non-resident Estonian companies, allowing the secure exchange of information about the company’s activities with the accountant and the Estonian Tax and Customs Board.
Our team is constantly working on making accounting for our customers as simple and convenient as possible.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Today, we are pleased to offer you the use of our accounting program, which will allow you to:
Invoice to your customers in a format that complies with Estonian law
Save information about the company’s activities during the reporting period
Have a digital archive of all company documents
View the current status of the company’s accounts
Be confident in the security and confidentiality of the information provided
The use of this accounting program for LKS Consult OÜ clients is completely free of charge.
Program description
LKS Consult accounting software is a convenient accounting program capable of bringing the automation of financial accounting to a qualitatively new level. A convenient online product and the services available in it will allow you to effectively solve the problems of any business.
LKS Consult OÜ continuously improves the program and services to offer a modern and versatile accounting solution that meets the needs and objectives of our clients. This accounting program is designed to automate all accounting and tax records in accordance with the current Estonian legislation.
The main advantages of LKS Consult accounting software are the possibility of keeping sales accounts that meet the requirements of Estonian legislation, organization of analytical, currency, quantitative accounting of the company, simple and convenient functionality, 24/7 availability from anywhere in the world.
Program opportunities
Sales invoice accounting
Convenient and easy to generate sales accounts to provide to your customers. The company’s new customers are automatically saved to the customer base. All accounts are also converted to PDF. A quick and convenient overview of the status of compiled accounts in the list of sales accounts.
Main advantages:
Simple and fast compilation of sales accounts
Convenient overview of compiled sales accounts
Adjustment of the content and presentation of accounts
Support of different currencies for all types of transactions
Export of accounts in PDF format
Purchase invoice accounting
The loading of purchase accounts is as simple as the creation of sales accounts. Your company’s accountant will be able to charge each purchase account to different groups of expenses. The list of purchase accounts gives a quick and clear picture of the status of your Estonian company’s accounts.
Main advantages:
Convenient overview of the status of purchase accounts
Copies of invoices and cheques are saved on the server
Support of different currencies for all types of transactions
Export of accounts in PDF format
Bank statement
In the section Banking services, you can access all bank statements of your Estonian company by month and filter them by date or bank. With the help of LKS COnsult accounting software, you will be able to have an archive of bank statements for the entire period of the company’s activity and have access to them 24/7 from anywhere in the world.
Personal account
This section is created for convenience of clients and monitoring of financial indicators of the company. In the Account section, you can also see all the invoices issued by LKS Consult OÜ to your company, as well as their status.
LKS Consult accounting software is a convenient platform for automated accounting for Estonian companies with all necessary functionalities. Our product is constantly improving, and we come up with new and new approaches to solving accounting problems, taking into account the needs of our customers.
[vc_row][vc_column][vc_column_text]Until July 1, 2021 rules for declaring and fulfilling turnover tax obligations under the special MOSS (MiniOneStopShop) procedure were in effect for enterprises providing e-commerce and telecommunications services.
This meant that when providing digital services between different countries, it was possible to follow the rules of the country where the company is registered.
Digital services include any services provided electronically, for example:
Telecommunication services
Broadcasting services
Website development and hosting
Software development and update
Distance learning
Creation of images, texts and data, the possibility of using digital databases
Creation of music, movies and games, including online gambling
It should be noted that the following services are not digital:
Radio and television broadcasting services
Printed materials, such as books, newsletters, newspapers and magazines
Professional services, such as lawyers and financial advisors advising clients online
Training services in which course materials are provided by the teacher via the Internet
Offline data storage services
Advertising services (for example, in newspapers, on posters or on television)
Phone helpline/assistance
From July 1, 2021, the MOSS system can be used not only in the case of electronic services, but also in the case of all other services:
Which an Estonian company (liable for turnover tax) will provide to persons who are not registered liable for turnover tax from other EU countries
The place of origin of turnover, which is the country of the recipient of the service
All the marginal rates applicable in the member States of the Community for remote sales have been cancelled and, at the moment, a single marginal rate of 10,000 euros is applied.
Since the special procedure for taxation of turnover has expanded, its name has also changed. The new extended special order is now called OSS (OSS special order, English OneStopShop).
To ensure unhindered delivery of goods from third countries to the recipient or customer of the goods to simplify declaration and payment A special procedure has been introduced for the turnover tax on the import of such goods (IOSS, English Import OneStopShop).
Remote Sale and special OSS procedure
Based on the Turnover Tax Law, remote sale is the alienation of goods by an enterprise of one EU state to another EU state to an unregistered person liable for turnover tax.
The application of a special OSS procedure is voluntary for enterprises
It is important to remember that the new procedure can only be applied if the following conditions and requirements are met:
The seller of the goods or service provider has a location or permanent place of business in only one EU state.
The product is sold, or the service is provided to a person who has a place of residence or residence in another EU state, which is not registered as a turnover tax obligator or a person with a limited turnover tax obligation in any EU state.
The total turnover of remote sales within the Community and electronic communication services, as well as services provided electronically, does not exceed 10,000 euros per calendar year.
If the company still does not want to apply a special procedure, then still may be registered as a turnover tax obligated person in each EU State where a turnover tax obligation arises from the sale of goods or services to the final consumer.
Import of goods and special IOSS procedure
A special IOSS procedure was introduced primarily for the convenience of the end user. If the entrepreneur uses a special procedure, the recipient of the goods does not have to submit a customs declaration for goods ordered from third countries himself. The seller collects turnover tax when paying for the order and declares it monthly in the IOSS declaration.
Special order IOSS simplifies the fulfilment of tax obligations for entrepreneur: entrepreneur, joined special order can register the user to special order one state and to declare and pay the VAT when importing goods, covered by special order only in that state (the state in which was registered by the user) instead of paying tax turnover of import of goods in each country where the product imported.
Similar to the OSS special order, the application of the IOSS special order it is voluntary for enterprises.
In order to join the OSS/IOSS special procedure, an entrepreneur must submit an application to the Estonian Tax and Customs Department. After submitting the application, the company is issued a registration number, which is used only for the application of a special OSS/IOSS procedure.
When submitting an application, the taxpayer must take into account that the special IOSS procedure can only be used for remote sale goods imported from non-European Union states, the cost of which does not exceed 150 euros per order, and which are not excise goods.
Additionally, it should be taken into account: in order to consider the sale of imported goods as a remote sale, the goods must be physically delivered from outside the European Union directly to the final buyer.
If goods delivered from outside the European Union are sent to a customs warehouse in a member State of the European Union, from where they are subsequently delivered to a customer who is not registered as liable for turnover tax, then such transactions are not subject to declaration on the basis of a special IOSS procedure, since at the time of sending the goods to the customer were already in the territory of the European Union.
Execution of tax obligations
The obligation to submit the OSS declaration is quarterly, and the IOSS declaration is monthly. Declarations must be submitted by the end of the month following the tax period. The use of a special procedure is not an obligation, but an opportunity to make it easier to declare your turnover tax.
MOSS special order companies registered in Estonia that If they wish to apply the Extended Special Procedure (OSS) in the future, they should not submit a new application.
If the company no longer carries out remote sales inside the European Union or does not provide services covered by a special procedure, it may terminate the OSS/IOSS special procedure by notifying no later than the tenth day of the month following the month of change.
Cryptocurrency activities for Estonian companies are exempt from value added tax, which allows the company not to become a VAT-obligated entity, but there are still cases that do not fall under this exception.
Exchange of cryptocurrencies to traditional currencies (fiat) or other cryptocurrencies
The exchange of cryptocurrencies, as well as the exchange to fiat, is exempt from value added tax in accordance with § 16 (21) 4) of the Turnover Tax Law.
However, not all services related to cryptocurrency are considered as an exchange service, and it is important to correctly determine whether the company is engaged in providing cryptocurrency exchange services or sells a service by using a third-party platform.
In the first case, the company has no obligation to register as taxable, since the company’s turnover is exempt from value added tax and the crypto-exchange company is not required to have a tax number.
Service for providing access to the platform
The service that provides access to the exchange platform is considered as an electronic service and is subject to value added tax in accordance with the Estonian Turnover Tax Law.
Thus, a company that provides a service for using a cryptocurrency exchange platform is not exempt from paying value added tax and must be registered as taxable and declare its monthly turnover – in a turnover tax return in a form of KMD.
Cryptocurrency Wallet Service
The cryptocurrency wallet service (storage only) is a software that allows you to store other user’s private keys. In this case, the wallet service is of a technological nature and represents technological assistance, which is an electronic service. According to the decision of the European Commission, the wallet service does not fall under the tax deduction, and wallet services provided for remuneration are subject to value added tax, and it is necessary to obtain a VAT number.
Wallet services can also be considered as financial services, if the wallet allows users to both store and make transactions with cryptocurrency. In this case, the wallet service will be subject to value added tax as a financial service in accordance with the Turnover Tax Law. Accordingly, the company that provides wallet services must become taxable and declare its monthly turnover in the Tax and Customs Department in the KMD declaration form.
Mining
According to the decision of the European Commission, the extraction of virtual currency as a service to another person falls under the exception provided for in Article 135 (1) (d) of the Directive of the Law on Turnover Tax, which means that mining is not subject to value added tax and is a non-taxable turnover of the company.
In this situation, it is important to point-out that if we are talking about non-taxable turnover, then value-added tax is not deductible for the purchased mining goods, such as the purchase of equipment, payment for electricity consumed and other costs associated with mining.
Due to the fact that mining has been recognized as a non-taxable turnover, the company does not need to obtain a tax number in Estonia.
Conclusion
Registration of a person as a turnover tax obligee in Estonia is mandatory or voluntary.
The obligation to register as a turnover tax obligee arises for a person from the date when the taxable turnover of transactions made by the entity exceeds 40,000 euros from the beginning of the calendar year. (In the case of elector services, when reaching the 10,000 euro mark).
[vc_row][vc_column][vc_column_text]Investments are an integral part of the modern economy.
Cash, securities, other property, including property rights, other rights that have a monetary value, all of this applies to investments.
Investing is the safest and most long-term way to increase your income. The principle of operation is simple: You invest your money in a project that grows in price over time, and then you make a profit.
Estonia is consistently among the most open, competitive, and transparent economies in the world. This success is due to the intensive work on reducing bureaucracy, the rule of law and significant investments in infrastructure and human capital. This creates an environment that facilitates the search, development and supply of solutions and services on a global level.
The attractiveness of Estonia is proved by a large number of foreign investors, as well as the dominance of world-famous foreign companies in some sectors of the Estonian economy.
The main factors of Estonia’s investment attractiveness are considered to be:
The country’s low public debt (one of the lowest in Europe)
Independent judicial system, and as a result a low level of corruption
Predictable fiscal and taxation policy of the state
Electronic state (e-Estonia) and developed IT infrastructure in all sectors of the economy
High level of freedom of entrepreneurship and business expansion opportunities in the European Union countries
No tax on retained earnings of enterprises
The Government of the country has signed an agreement on the avoidance of double taxation with 60 countries.
Taxation of investment income for individuals
Taxation of income received from an investment fund depends on the residence and legal form of the investor.
According to the current Income Tax Law, income from the alienation of securities (including from the sale of investment fund units) received by a resident individual is taxed at a rate of 20%. The investor is obliged to declare income and pay income tax from it.
Income tax is not levied on income that an individual who is a resident receives from the exchange of shares for shares of another investment fund with which the same management company works, and income from shares of an investment fund or from the exchange of other participation shares during the merger of investment funds.
The income of a non-resident individual investor received from the sale of shares is not subject to income tax in Estonia
Taxation of investment income for legal entities
Income from the sale of shares received by a legal entity is not taxed. The income from investments is added to the profit and is taxed in the general order when distributing the profit.
It is estimated that more than 500 million euros are available on the Estonian private and venture capital market today.
A novice investor can use a variety of investment methods to make a profit in the future, for example, many entrepreneurs whose only asset is an idea are looking for investors to implement their goals and ideas.
Also, potential investors can find entrepreneurs who have joined the community in search of investors for the development of the project, which unites and supports Startup Estonia.
At the moment, Estonian startups have accumulated solid experience and skills to build a successful business, and the search for the necessary partners creates the foundation for success.
Many aspiring entrepreneurs have joined the co-financing/crowdfunding platform in search of investors. Co-financing platforms offer the opportunity to attract investors quickly and efficiently. They are used both by companies in the early stages of development and by entrepreneurs who have achieved their first successes and are seeking to expand their activities.
Another investment opportunity in Estonia is Private and Venture Capital Funds.
At a later stage of development, private and venture funds continue to finance startups. One idea is no longer enough here – a start-up company must have a team and a working prototype of a service or product.
As a rule, private and venture capital funds are not limited to providing money, they also support startups with their experience and contacts to help a new company achieve profit and growth as quickly as possible or successfully reach the next stage of financing.
For detailed advice on taxation of investment income for both individuals and legal entities in Estonia, we recommend contacting an accountant or tax consultant of LKS Consult OÜ and getting answers to your questions. Also LKS Consult OÜ provides professional accounting services for Estonian companies.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][us_page_block id=”10347″][/vc_column][/vc_row]
Before the entry into force of the Estonian regulation governing crowdfunding (collective financing), the authorities were concerned that there could be an avalanche of permit applications which would take a whole year to review. However, now there is concern that many companies providing crowdfunding services could miss out on the deadline to obtain a crowdfunding permit and would have to either stop or suspend their services.
The free movement of capital is one of the four fundamental freedoms of the single market of the European Union, and in order to safeguard these freedoms, it is necessary to simplify the rules and remove the restrictions that are an obstacle to the movement of capital between EU member states.
In this article, legal experts of LKS Consult OÜ give an overview of the information that you need to know before entering into a notarized contract in Estonia.
From 1 October 2022, data of the 
LKS Consult OÜ offers its customers the use of professional accounting software adapted for non-resident Estonian companies, allowing the secure exchange of information about the company’s activities with the accountant and the Estonian Tax and Customs Board.
Until July 1, 2021 rules for declaring and fulfilling turnover tax obligations under the special MOSS (MiniOneStopShop) procedure were in effect for enterprises providing e-commerce and telecommunications services.
The exchange of cryptocurrencies, as well as the exchange to fiat, is exempt from value added tax in accordance with § 16 (21) 4) of the Turnover Tax Law.