Introduction of euro in Estonia will also slightly change the allowed limits of non-taxable costs.
21st of October 2010
Starting from 1st of January 2011 Estonian companies have following limitations for business related costs.
Limits in euro for non-taxable business related costs
REPRESENTATIONAL EXPENSES: company can spend up to 32 EUR per month for restaurant bills, serving foods and drinks, accommodation, transportation such as taxi or public transport, and cultural events. It sums up to cumulative of 384 EUR which can be spent within the same financial year. Previously it was 500 EEK and 6000 EEK.
PERSONAL CAR USE BY EMPLOYEE OR BOARD MEMBER: if the journeys are not recorded in the diary then the maximum of non-taxable car related cost is 64 EUR per month, with use of diary it is 0,30 EUR/km, max. 256 EUR per month. Previously it was 1000 EEK and 4 EEK/km, max. 4000 EEK.
Allowed costs for company car are unlimited if the diary is kept, without diary taxes apply on the amount of 256 EUR per month without any relation to real costs declared.
BUSINESS TRIPS OF EMPLOYEE OR BOARD MEMBER: company can pay the full amount of the tickets if proven as a business trip. When travelling by personal car and journeys are recorded in the diary, company can pay up to 256 EUR per month (together with all other journeys of the month) and without diary up to 64 EUR per month (with all other journeys of the month) for car related costs. Previously it was 1000 EEK and 4000 EEK.
Accommodation based on a document certifying it, is non-taxable if cost per night is within Estonia no more than 77 EUR and abroad no more than 128 EUR. Previously it was 1200 EEK and 2000 EEK.
Per diem can be paid only if employee/board member is on a business trip abroad, non-taxable is per diem up to 32 EUR per day. Previously it was 500 EEK. Number of days in month to receive daily allowance for is unlimited and can be therefore all the calendar days of the month.
Non-taxable are also costs for travel insurance, visa, transport of the luggage, local transport, parking, telephone, internet, use of garage or any other business related service when base documents provided. Drinks and food cannot be part of non-taxable costs if per diem is paid and also a daily limit of 32 EUR applies on these items.
Unlimited but regulated non-taxable costs
TRAINING OF EMLPOYEE OR BOARD MEMBER: trainings are non-taxable and company can ask for a VAT refund, if the training was in the interest of company (in respect of § 48 of the Income Tax Act) and not the private interest of the employee or the board member.
LOANS TO STAFF: the loan itself is not taxed as a benefit, as the loan will be repaid. The benefit is gained if the loan is given at a lower interest rate than established by the Minister of Finance (currently set at 2%) or if there is no interest at all. Then missing interest has to be declared by the company as a benefit and taxes apply on the amount of missing interest. No loans can be given to board or shareholders.
USING HOME OFFICE OFEMPLOYEE OR BOARD MEMBER: all costs have to be related to business and must be documented. All home office costs should be weighed and declared in terms of real proportion used for business purposes. Most common allowed expenses are use of internet and telephone, utilities, household goods such as light bulbs and of course the rent of apartment/house.
Veronika Kimsen
info@1office.ee
