Understanding Entrepreneur Account for Private Persons in Estonia

Entrepreneur Account is a dedicated bank account allowing private individuals to earn income without registering as a business in Estonia. It provides a hassle-free way to operate as an entrepreneur, handling tax obligations automatically. The taxation system, social benefits, and use cases make it an attractive option for various services. Learn more about how it works, taxation rates, and social benefits associated with Entrepreneur Account in Estonia.

• Entrepreneur Account
• Private Persons
• Estonia
• Taxation
• Social Benefits

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1. EntrepreneurAccount forPrivatePerson Henri Lindeberg Developmentspecialist Estonian Taxand CustomsBoard 30.01.2020

2. Entrepreneur Account What is Entrepreneur Account? Entrepreneur Account is a dedicated bank account where private person can earn income from providing sevices without registering as a business. It is meant to helpprivate person to operate as an entrepreneur in a bureaucracy free and affordable manner, without worrying about: bookkeeping; financial statements; declaring monthly tax declarations and the payment of taxes. An Entrepreneur Account is a good solution when one private person pays another private person for services or goods that they have provided, and for fulfilling the tax obligation arising from the income received. 2

3. Entrepreneur Account How It Works? Client s and account owner s activities Account owner can use the amount left on account Client makes transaction to Entrepreneur Account Tax is automatically calculated and paid ETCB allocates the paid tax between different types of taxes 3

4. Entrepreneur Account Taxation Entrepreneur Account tax rate: If the income is up to 25,000 per calendar year, the tax rate is 20% of the sum received in the Entrepreneur Account. If the income for the calendar year exceeds 25,000 , the amount exceeding it will be subject to a 40% tax rate. Tax withheld is divided between three types of taxes: Income tax (20/55) Social tax (33/55) Contribution to funded pension (2/55) 4

5. Entrepreneur Account Social Benefits from Paid Taxes Health insurance Account owner has to fulfill the monthly minimum social tax liability with income from Entrepreneur Account in combination with social tax from other earnings like salary income. Minimum social tax liability in Estonia in 2020 is 178,20 . Account owner has to receive approximately 1 500 monthly to meet the monthly minimum social tax liability. Payments to pension funds Income tax to your local government E.g. used to develop local environment in account owner s residential area. 5

6. Entrepreneur Account Use Cases Additional occasional work Sharing economy platforms Providing services to private persons through platforms Babysitting Selling handicrafts Giving cources/lectures as freelancer Photography Programming/coding 6

7. Entrepreneur Account Statistics No. of Accounts in 2019 (Cumulative) 2,000 1,500 1,000 500 0 Jan Feb Mar Apr Male May Jun Female Jul Aug Sep TOTAL Oct Nov Dec 7

8. Thank You! Henri Lindeberg Development specialist Estonian Tax and Customs Board