Freelancers need to declare income received via Solar Staff by themselves, because the service is not a tax agent and does not pay tax on your income.
To carry on tax accounting in Estonia for your Solar Staff income, you need to:
Estonia’s residents are taxed on their worldwide income, while non-residents are taxed only on their Estonian-sourced income.
Individuals are considered residents of Estonia if they stay in the country for more than 183 days over a period of 12 consecutive months.
To interact with Estonian government authorities (including for the purpose of paying taxes), you must complete electronic registration as a natural person and obtain a digital identity card (ID-kaardiga). You may apply for an ID card either in person at the Police and Border Guard Board (Politsei ja Piirivalveamet) or online. Learn more here.
There is no separate tax number for natural persons and sole proprietors in Estonia.
Taxes and contributions payable by freelancers
To receive income via Solar Staff, freelancers from Estonia are required to register as a sole proprietor (FIE, Füüsilisest Isikust Ettevõtja). The registration process is completed online only. Learn more about the registration process here.
Learn more about taxes and contributions payable by freelancers below.
When calculating the income tax, it is also important to consider income amounts that are exempt from taxation. The exempt income amount depends on the total annual income received.
In 2023, the following income amounts are exempt from income tax:
Annual income, EUR
Exempt income, EUR
Up to 14,400
Between 14,400 and 25,200
7,848 – 7,848 / 10,800 * annual income
Tax reporting and payment. Taxpayers are required to make advance income tax payments and file an annual tax return. Advance income tax payments must be made to the Tax and Customs Board (Maksu- ja Tolliamet) in equal amounts no later than September 15 and December 15. The amount of advance income tax payments is calculated based on the taxable income earned in the previous calendar year. The sole proprietor's income tax return (Form E) is required to be submitted online along with the natural person's income tax return (Form A and respective filling instructions) no later than April 30 of the year following the reporting year (you may file a tax return starting from February 15). After reviewing the tax return, the tax authorities will inform the sole proprietor about the income tax due by sending them a notice no later than September 1. The tax is due to be paid before October 1.
Social tax (sotsiaalmaks) is paid at a rate of 33% on income earned from entrepreneurial activities.
Tax reporting and payment. The social tax must be fully paid no later than October 2 of the year following the reporting year. There are no specific registration or reporting requirements for the social tax, as the tax amount is calculated by the tax authorities based on income tax returns (Forms E and A). Sole proprietors are required to make advance payments of the social tax no later than March 15, June 15, September 15, and December 15.
VAT (käibemaksukohustuslasena) is payable by sole proprietors whose taxable turnover since the beginning of the year exceeds EUR 40,000. Sole proprietors may choose to voluntarily register as VAT payers. The registration application may be submitted online, at the Tax and Customs Board, through the e-Business register, or via a notary.
VAT rates are set in clause 15 of the Value Added Tax Act and are 20%, 9%, 5%, and 0%.
Tax reporting and payment. VAT payers are obliged to issue and keep invoices (see more details here). The taxable period for VAT is one calendar month. The deadline for submitting both the VAT return and the turnover report is the 20th day of the month following the reporting month. The VAT return and turnover report may be submitted online either by entering data manually or uploading files in XML or CSV formats. The tax shall be paid within the same timeframe.
Mandatory funded pension (kohustuslikukogumispensioni makse) contribution is calculated by the tax authorities at a rate of 2% based on income tax returns. It is payable once a year before October 1 and may not be included in expenses as a deduction to reduce taxable entrepreneurial income.
Learn more about keeping accounts as a sole proprietor
If you have any questions, get in touch via the chat in your Solar Staff account or email us at [email protected].