Since 2011, Estonia has had two parallel systems for taxing private individuals’ investment income: the ordinary system, under
which all sales of securities have to be declared, and the investment account system, under which only cash payments into and
out of the account have to be declared.
You can also declare income from securities under both systems.
If you use the ordinary system (i.e., you only use a securities account for investment), all sales of securities
during the year will be declared. Income tax liability arises when you have made a profit on all your sales. Income tax must
be paid with the tax return of the following year. However, if you make a loss for the year, you can carry it over to the next
year. Under the ordinary system, you can deduct service fees from the realised income, but not administration fees.
When you use the investment account system (i.e., you use an investment current account in addition to the
securities account), you declare the payments into and out of the bank account designated as the investment account, not the
securities transactions. You can also use several investment accounts with several banks at the same time. A tax liability
only arises if the total of the payouts made from all investment accounts exceeds the total of the contributions made to all
Generally, profit or loss can arise in two ways.
When selling securities:
Profit or loss = sales price – cost of sales – acquisition cost
When exchanging securities:
Profit or loss = acquisition cost of the security to be exchanged – market price of the security received upon exchange
The acquisition cost is considered to be all documented costs incurred by the investor to acquire the asset.
The FIFO method or the weighted average method is used to calculate the acquisition cost of securities of the same name acquired
at different prices and at different times. Profit from a securities transaction can be deducted against losses on securities
in the same or previous years. Losses can be carried forward indefinitely, but cannot be inherited, given as a gift, sold, etc.
No, you do not have to declare these exchanges or pay income tax on them.
As it is not possible to distinguish whether you are using the ordinary system or the investment account system when submitting
the data, this information reaches the Tax and Customs Board automatically.
When completing the declaration, verify that no transactions are automatically included in sections 6.1 and 8.2 – these fields
must be left blank when using an investment account. However, if there are any records of your transfer of Estonian or non-Estonian
securities, they must be deleted.
In addition, review section 6.5 of the Tax and Customs Board’s declaration, where you must confirm that you have an investment
account, and verify that your report is included in the declaration.
An investment account is a current account used exclusively for investments and transactions in financial assets.
However, if you happen to make a single transfer from your investment account, for example, when paying online, there is nothing
to worry about. When you fill in an investment account report in the future, you simply need to mark the transaction as a payout.
In the same way, for example, if someone inadvertently transfers funds into your investment account, it should be recorded as
a contribution. The report must normally be sent to the Tax and Customs Board during the income declaration period. Next year
try to be more careful.
There’s nothing wrong with that, and you can send an investment account report afterwards. To do this, please notify the Tax and Customs Board.
Unfortunately, you can no longer change it. For help, contact us by calling +372 613 1606 (weekdays from 9.00-17.00).
An investor can have several securities accounts with the same bank or with different banks.
If you use an investment account with a securities account, fill in the investment account report in each bank separately
and submit it to the Tax and Customs Board.
If you only use a securities account, these transactions will be recorded in the Tax and Customs Board’s declaration under
sections 6.1 and 8.2. In this case, verify that the transactions made with all banks are recorded correctly.
Documentary evidence of an expense directly attributable to the acquisition and disposal of a financial asset will be treated
as a contribution to an investment account if the expense is not incurred on account of the contribution. When considering
expenses, the rule is that expenses incurred on account of a contribution cannot be declared as a new contribution.
Investor A has 0 currency units in their investment account and a contribution balance of 0 currency units. They transfer 228
currency units to their investment account. Their investment account now has 228 currency units and their contribution balance
is 228 currency units.
They buy shares in AS ABC for 225 currency units and pay a transaction fee of 3 currency units from their investment account.
In such a case, it is not allowed to declare the transaction fee as a contribution, as the same amount cannot be treated as
a contribution twice.
Investor B has 228 currency units in their investment account and a contribution balance of 200 currency units. They withdraw
200 currency units from their investment account. Their investment account now has 28 currency units and their contribution
balance is 0 currency units.
The investor transfers an additional 200 currency units to the investment account.
The investor buys shares in AS ABC for 225 currency units and pays a transaction fee of 3 currency units from their investment account.
In such a case, it is allowed to declare the transaction fee as a contribution, as the amount of the transaction fee has not
been previously included as part of the contribution.