Estonian Tax and Customs Board Launched an Entrepreneur Account for Natural Person

Kairit Veerberk's picture
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In January the Estonian Tax and Customs Board in coopertion with an Estonian bank, LHV Pank, launched an Entrepreneur Account simplifying the payment of taxes and reporting for private persons engaged in entrepreneurship.

An Entrepreneur Account is a new and favourable form for engaging in entrepreneurship. This is an opportunity for private individuals to facilitate the fulfilment of entrepreneurship-related obligations. When using the Entrepreneur Account, one does not have to worry about the financial statements, monthly tax returns or payment of taxes – everything is automatic. If the business volume is sufficient, the user of the Entrepreneur Account will also acquire the right to health insurance.

“The experience and surveys of the Tax and Customs Board show that the easier it is to comply with the tax obligation, the bigger the receipt of taxes. Altogether 92 per cent of the population in Estonia consider the payment of taxes an important civic duty and our goal is to support good tax behaviour and the willingness of people as a whole through services that simplify the payment of taxes. Entrepreneur Account and other services help to lower the burden on people when fulfilling their tax obligations, to make sure that they can focus on the development of their business,” said Valdur Laid, Director General of the Estonian Tax and Customs Board.

“Entrepreneur Account is a long-awaited new service. I believe that there are many enterprising people in Estonia that this option might suit and who could open an Entrepreneur Account for themselves. Entrepreneur Account is a good example of the joint development of banking services and state systems making it possible to find novel solutions, which make administrative formalities easier and less bureaucratic for people." said Erki Kilu, Chairman of the Management Board of LHV Pank.

Entrepreneur Account is useful for persons who provide services or sell products to other private persons without large expenses in advance or the costs of which are paid by the person ordering the service. For example, the Entrepreneur Account could be used by nannies, domestic workers, persons engaged in repair or construction works, as well as craftsmen, artists, sellers of home-grown food. Entrepreneur Account is also easy and suitable for new forms of entrepreneurship such as Taxify, Uber or other sharing platforms. The Account is not suitable for commodity brokers or when the input cost makes a large part of the sales price.

When using the Entrepreneur Account, the tax rate is 20% of the amount received in the Entrepreneur Account. If annual income exceeds EUR 25,000, the amount exceeding it will be subject to a 40% tax rate. If the sum received in the Entrepreneur Account exceeds EUR 40,000 in a calendar year, it will not be possible to use the Entrepreneur Account.

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