Problems with taxes

To avoid problems with taxes, you should retain all documents that prove your income, expenditures and the composition of assets as well as any changes therein. When an income tax return is filed, copies should be made of all evidence presented to the Tax and Customs Board and these copies should be carefully retained. All tax-related documents should be preserved for at least seven years.

To avoid problems with taxes, it is important to be extremely careful when completing a tax return. There are penalties for providing false information in a tax return.

If it seems to you that a tax administrator has exaggerated some tax claims, you should first contact this tax administrator, i.e. the Tax and Customs Board or some other institution administering tax collection and levying or supervision of tax payments, and request an explanation about the determination of the amount of taxes. If the explanation is unsatisfactory or unconvincing, you should contact a lawyer familiar with tax matters. Tax law is a very specific field, and not every lawyer is necessarily qualified to provide relevant advice. You can also seek tax-related advice from the Estonian Taxpayers Association; there are plenty of useful tips on their website.

The Estonian tax system may be roughly divided into two:

  • state taxes (e.g., VAT and income tax)
  • local taxes (e.g., motor vehicle tax, sales tax).

State taxes are levied with a special tax law; local taxes are generally provided in the Local Taxes Act, but levying them on the territory of each local government and their rates are decided by the council of this particular local government in its regulation. Taxes should not be confused with payments for utilities, which are in fact regular payments made on the basis of a contract.

Compiled by: Estonian Tax and Customs Board