An overview of the latest changes in legal acts

Changes in taxes

Import VAT payment declared on VAT return

As from the beginning of 2008, provisions of the Value Added Tax Act entered into force that provide enterprises who mostly operate on foreign markets with the right to declare the postponed import VAT on the VAT return and be exempted from the actual remittance of import VAT to the Tax and Customs Board. In order to apply for declaring import VAT only on the VAT return, an enterprise has to meet several requirements of the Act. The issue is more thoroughly discussed at the Estonian website of the Tax and Customs Board.

New VAT return form

The new VAT return form has been published in the appendix to the State Gazette (Riigi Teataja Lisa RTL 2007, 73, 1263). Link to the Estonian text of the Regulation of the Minister of Finance

The form can also be found at the website of the Tax and Customs Board. Link to the website

Tax incentive for intra-Community passenger transport terminated

A provision of the Value Added Tax Act regulating special arrangements for imposing value added tax on travel services has been repealed. According to section 40 subsection 10 of the Value Added Tax Act, the enterprises subject to a special scheme for imposing value added tax on travel services had the right to apply a zero rate to intra-Community travel services. The fixed term tax incentive was effective until 31 December 2007.

The Tax and Customs Board has commented on the termination of the VAT incentive at their Estonian website.

Minimum wages risen

In conformity with regulation No 254 by the Government of the Republic based on the Wages Act, the minimum hourly wages are 27 kroons and the minimum monthly wages for full-time employment are 4,350 kroons as from 1 January 2008. Link to the Estonian text of the regulation

Provisions of advance tax ruling in force

As from 1 January 2008, based on the Taxation Act, taxpayers can apply for an advance tax ruling by the Tax and Customs Board. The advance tax ruling provides taxpayers with a binding assessment of how a future transaction or a series of transactions will be charged. State fees paid for reviewing an advance tax ruling application are 12,000 kroons in the case of legal entities and 3,000 kroons for individuals.Link to the Estonian text of the amendment

Three conventions for avoidance of double taxation effective

The conventions between Estonia and Georgia, Estonia and Luxembourg, and Estonia and Singapore for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and on capital are effective as from 1 January 2008. Link to the conventions

European Union planning changes in charging VAT on services

At the beginning of December, finance ministers of the European Union agreed on a package of new VAT arrangements that will be phased in as of 2015. The document includes several changes, but enterprises providing telecommunication, broadcasting and electronic services will experience the impact of the amendments the most as according to the plans, in the future the place of taxation of those services will be the country where the consumer is located (at present, VAT is charged in the supplier’s location or via the customer if the latter has a VAT registration number in another member state). In addition, several amendments will be made to the directive that regulates refunding VAT within the European Union for costs incurred in a country other than that of the taxpayer.

Amendments to legislation

Money Laundering and Terrorist Financing Prevention Act

The Riigikogu (the Parliament of Estonia) adopted a new wording of the Money Laundering and Terrorist Financing Prevention Act. The purpose of the new wording is to harmonise the Estonian law with the Third Directive (Directive 2005/60/EC of the European Parliament and of the Council on the prevention of the use of the financial system for the purpose of money laundering and terrorist financing that repealed Directive 91/308/EEC) and Directive 2006/70/EC laying down implementing measures for the Third Directive.
The central issue of the Act is updated due diligence measures that are the primary means for achieving the aims of the Act.

Estonian text: RTI, 18.01.2008, 3, 21 Date of entry into force: 28 January 2008

 
Estonian text can be found at Rahapesu ja terrorismi rahastamise tõkestamise seadus

Amendment Act of Insurance Activities Act, Financial Supervision Authority Act and Personal Data Protection Act

The amendments to the Insurance Activities Act, the Financial Supervision Authority Act and the Personal Data Protection Act mostly stem from the Reinsurance Directive (Directive 2005/68/EC of the European Parliament and of the Council on reinsurance and amending Council Directives 73/239/EEC, 92/49/EEC as well as Directives 98/78/EC and 2002/83/EC of the European Parliament and of the Council).
In principle, in regulating reinsurance activities the current approach is retained: provisions regulating insurance activities are also applied to reinsurers unless stipulated otherwise in the Insurance Activities Act. Special provisions applicable to reinsurance activities derived from the Reinsurance Directive are added to the Act. The most significant specifications are related to reinsurance activities and prudential requirements.

Estonian text: RTI, 19.12.2007, 68, 421 Date of entry into force: 1 January 2008

Estonian text can be found at Kindlustustegevuse seaduse, finantsinspektsiooni seaduse ja isikuandmete kaitse seaduse muutmise seadus

Environmental Liability Act

The main reasons why the Environmental Liability Act was developed and adopted were the need to arrange and regulate the local legislation governing environmental liability as well as harmonising the legislation with the Environmental Liability Directive (Directive 2004/35/CE of the European Parliament and of the Council on environmental liability with regard to the prevention and remedying of environmental damage).
The Act regulates the prevention and remedying of environmental damage based on the principle “polluter pays”. The principle “polluter pays” is one of the foundation stones of the European Union environment policy and the fundamental principle of the Environmental Liability Directive.

Estonian text: RTI, 06.12.2007, 62, 396 Date of entry into force: 16 December 2007

Estonian text can be found at Keskkonnavastutuse seadus

Amendment Act of acts related to notary information system and legal registers

Among other legal acts, the Act also amends and specifies provisions of the Commercial Code.
A new section was added to the Commercial Code. Based on the example of the provision regulating public limited companies, section 167¹ stipulates the liability for damaging the private limited company by influencing the activity of the private limited company.

Estonian text: RTI, 18.12.2007, 67, 413 Date of entry into force: 28 December 2007         

Estonian text can be found at Notarite infosüsteemi ja õigusregistritega seotud seaduste muutmise seadus

Amendment Act of Holidays Act

 
According to the amendment, the father has the right to be granted a paternity leave of ten working days during the pregnancy leave or maternity leave of the mother or within two months after the birth of the child. The paternity leave pay is calculated on the basis of the father’s average wages, but it cannot be higher than three times of Estonia’s average monthly gross wages in the quarter preceding the quarter before the month the leave is taken, based on the data disclosed by the Statistical Office of Estonia.
The holiday pay is compensated to the employer from the state budget funds in accordance with the Holidays Act.

Estonian text: RTI, 28.12.2007, 71, 436 Date of entry into force: 1 January 2008

Estonian text can be found at Puhkuseseaduse muutmise seadus