Estonia is known for its transparent and efficient tax system, which attracts many entrepreneurs from all over the world. However, even in such a favorable environment, there is a risk of encountering tax control if certain rules are not followed.
In this article, we will look at what steps can be taken to avoid falling under tax control in Estonia.
Basic principles of the Estonian tax system
Before proceeding to specific recommendations, it is important to understand the basics of the Estonian tax system.:
- Income tax. For legal entities, the rate is 20% on distributed profits, and for individuals.individuals pay income tax on the PO and other income.
- VAT. The standard VAT rate is 20%, but there are reduced rates for some goods and services.
- Social contributions. Employers are required to pay social contributions for their employees.
- Reporting. Companies must submit annual reports and VAT declarations on a quarterly basis.
Please note that Estonia actively uses electronic services for filing reports and paying taxes.
Recommendations for avoiding tax control in Estonia
Our experts recommend the following:
- Maintaining accurate and complete accounting records. One of the main reasons for attracting the attention of the NTD is the improper management of accounting documents. To avoid this, it is necessary to regularly update data, use certified programs, and monitor compliance with legislation.
- Timely filing of declarations and payment of taxes. Filing tax returns and timely payment of taxes are mandatory conditions for any taxpayer. Therefore, we recommend that you do not miss the deadline for filing declarations, pay taxes on time, and use electronic services whenever possible.
- Avoiding aggressive tax optimization schemes. Some entrepreneurs are trying to use various schemes to reduce the tax burden, which may turn out to be illegal. For example, we are talking about fictitious transactions, false documents or transfer pricing. It is extremely important to avoid such methods, as they can lead to consequences.
- Maintaining transparency in business. Transparency of the law firm’s activities plays an important role in relations with tax authorities. Therefore, we recommend that information about owners and beneficiaries be made public, promptly respond to requests from the NTC, and comply with international standards.
To ensure compliance with all the requirements of the tax legislation, it is recommended to consult regularly with professional tax consultants. They will help to develop an optimal tax strategy, verify the correctness of filling out declarations, and provide up-to-date information on changes in legislation.
Summarizing
By following the above recommendations, you can significantly reduce the risk of falling under tax control in Estonia. The main thing is careful accounting, timely filing of reports and payment of taxes, as well as the use of legitimate methods of tax optimization. You can get expert advice from us.
Contact us!