InfoCourier April 2018 | KPMG | EE

InfoCourier April 2018

InfoCourier April 2018

InfoCourier is a monthly newsletter which gives an overview of the latest changes in legislation.

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InfoCourier April 2018

The Estonian Tax Authority’s Guideline on distinguishing dividend, salary and board member’s fee

The purpose of the guideline is to explain how to behave in a situation where the shareholder pays itself dividends instead of salary and thereby reduces the company’s tax burden on the account of social security taxes.

The guidelines are provided to describe how income is taxed in different situations (minimum salary versus dividend, dividend income without salary etc.)

The guideline is available here (in Estonian).

For further information, please contact Joel Zernask, jzernask@kpmg.com

The Estonian Tax Authority reminds the rules of tax reporting for company cars

From 2018, the price of the fringe benefit of using an employer’s car for both work and personal purposes is based on the car’s engine power. Where a company’s car is not used for personal purposes, a relevant record has to be made in the Traffic Register. 

The Tax Authority also draws attention that there have been many ownership changes related to cars and the transactions might not be shown correctly in tax reports. According to the Value Added Tax Act a transfer of car is a taxable supply. In addition, the arm’s length principle must be followed in transactions between related parties. 

A detailed overview in Estonian is available here.

For further information, please contact Merike Oja, tax adviser, moja@kpmg.com

Court Decision: Income tax on inherited immovable

The Court of Appeal analyzed in its decision the legitimacy of a transfer of an immovable inherited as a joint ownership. The joint ownership was terminated, the brother paid compensation to the sister and became the sole owner of the property. As the acceptance of the immovable was not subject to income tax, the sister mistakenly thought that income tax is not charged also on gains derived from the transfer of the immovable.

The Court of Appeal explained that the gains derived from transfer of immovable are subject to taxation under the Estonian Income Tax Act.

A detailed overview in Estonian is available here.

For further information, please contact Einar Rosin, tax adviser, erosin@kpmg.com

© 2018 KPMG Baltics OÜ, an Estonian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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