Tax Breaks for Expatriates/Digital Nomads in Estonia

Tax incentives for expatriates and digital nomads in Estonia are primarily governed by the Income Tax Act (ITA) and related regulations.

• The specific provisions outlining tax breaks for expatriates and digital nomads may be found in various sections of the Income Tax Act, including those related to tax rates, deductions, and exemptions.
• Additionally, government policies and administrative guidelines may provide further details on the implementation of these tax incentives.

Expatriates:

• Definition: Individuals residing in Estonia under temporary work assignments or secondment agreements.
• Residency Requirement: Generally, expatriates must be tax residents of Estonia to qualify for tax breaks.
• Reduced Tax Rates: Expatriates may be eligible for reduced tax rates on certain types of income earned during their temporary assignment in Estonia.
• Tax Exemptions: Certain allowances and benefits provided to expatriates, such as relocation expenses or housing allowances, may be exempt from taxation.
• Application: Expatriates typically apply for tax breaks through their employer or the relevant tax authorities.
• Documentation: Documentation proving the temporary nature of the assignment and eligibility for tax incentives may be required.

Digital Nomads:

• Definition: Individuals who perform remote work while traveling and may not have a permanent residence in Estonia.
• Residency Requirement: Digital nomads may qualify for tax breaks if they meet specific criteria, such as spending a certain number of days in Estonia without becoming tax residents.
• Remote Work Deduction: Digital nomads who perform remote work for non-local companies may be eligible for a deduction on their Estonian income tax.
• Non-Resident Tax Status: Digital nomads who maintain non-resident status in Estonia may be exempt from taxation on foreign-sourced income.
• Self-Assessment: Digital nomads are responsible for assessing their eligibility for tax breaks and claiming deductions on their tax returns.
• Documentation: Digital nomads may need to provide evidence of their remote work activities and non-resident status.