Legislation changes – 2019
Just today about 300 amendments to legislation came into force. In this short review we describe the most important and actual of them.
Contribution to charter capital of Estonian company.
As we have already written there is no more need to open starting account in Estonian bank to contribute to share capital of a company. From now on it in not obligatory anymore to have a starting banking acount in Estonian bank to register a company in Estonia. It may be also a banking or fin-tech account in the European Economic Area.
In case of foundation of joint-stock company (aktsiaselts) it is still needed to open of a securities account in Estonian bank.
Lower tax on regular dividends.
In 2019, it will be able to apply for the first time a 14 percent income tax rate on dividends which are less than or equal to one third of the profits distributed in 2018. A lower tax rate is only allowed if where profits are distributed to legal entities. For a natural person the income taxe rate will make 21 percent.
Regular dividends are distributed profits that are less than or equal to the average taxed profit of the previous three calendar years. Thus the first year for calculating the three-year average dividend are 2018. The full rate of 14 percent can be applied in 2021.
Taxation of turnover for electronically supplied services.
From 2019 if Estonian company sells electronically supplied services to consumers in European Union less than 10 000 eur per year, the entrepreneur has the right to declare all such cross-border turnover as the domestic turnover of Estonia. In this case, an Estonian company can compile an invoice for such consumer based on the Estonian billing rules.
Where the cross-border turnover of such services exceeds 10 000 eur per year, the company is obliged to register for VAT in each Member State where services were sold or to apply special arrangements for tax liability in such Member State.
Minimum wage and minimum social tax payout.
The minimum wage will be 540 eur and the minimum hourly rate is 3.21 eur. In 2018, they were 500 eur and 2.97 eur, respectively.
Minimum social tax liability increases to 165 euros per month. This means that the employer has to pay a social tax of at least 165 euros per month for the social security of the employee, even if the employee works part-time. This will affect members of Management Boards which need to pay for medical insurance 165 eur instead of 155.10 eur.
Working hours to be recorded in the employment register.
Employer must enter the working time of each employee in the employment register. This obligation applies only to people working under a working contract. It is not necessary to enter the working time rate for the members of Management Board or Supervisory Board as well as for the persons employed under an agent or commission agreement.