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On 1 January 2023, amendments to the Tax Information Exchange Act and the Taxation Act entered into force, which will introduce reporting obligations for various online platforms. What kind of platforms will have to comply with the reporting obligation?
Which platforms are affected?
Reporting obligations are imposed on online and software-based platforms that bring together different service providers and buyers of their services or products, such as AirBnB or Fudy. This means that the reporting obligation does not apply to platforms that mediate payments (PayPal or MakeCommerce) or platforms through which a service can only be provided by a company that controls the platform itself (e.g. online stores).
The rules of reporting apply to the following paid services:
- Lease or rental of an immovable or a part of an immovable (e.g. AirBnb);
- The provision of a time- or task-based service (e.g. GoWorkaBit, Wolt);
- The transfer of an item (e.g. Yaga, Osta.ee);
- Lease or rental of a means of transport (e.g. lease of a private person’s car).
Platforms offering free services (e.g. Raamatuvahetus.ee) are not subject to the reporting obligation. The reporting obligation applies to Estonian tax residents only. For those who are not Estonian residents, reporting is mandatory if:
- Their place of management is in Estonia; or
- They have a permanent place of business in Estonia; or
- They are a legal arrangement established on the basis of Estonian law (for example, a limited liability company – OÜ).
Whose data is it mandatory to provide?
There is no need to provide information on the following platform providers:
- Persons employed by the platform – e.g. couriers who have an employment contract;
- Legal entities operating through the platform that provide a lease or rental service at the same address at least 2,000 times a year – for example, hotels and other professional accommodation providers operating through Booking.com;
- Both natural and legal persons who enter into fewer than 30 transactions for the sale of items through the platform for a total amount not exceeding €2,000 per year – e.g. persons selling their personal belongings;
- Governmental authorities and entities selling their assets through an auction platform – e.g. Osta.ee.
It is irrelevant whether the platform is used by a natural person, a legal person or another legal entity (e.g. a sole proprietor – FIE). What matters is that the person is registered on the platform and performs one of the above mentioned paid services through it.
The reporting obligation
Under the legislative changes, the Tax and Customs Board (MTA) will have to be regularly provided with information on both the persons operating on the platform and the income they earn. For the first time, information on income earned in 2023 will have to be submitted to the MTA in January 2024.
What information is mandatory to collect and provide?
In order to comply with the reporting obligation, the following information must be collected and submitted to the MTA for service providers operating through the platform:
|In case of a natural person||In case of a legal person|
First and last name
Address in the main country of residence or jurisdiction
Permanent place of business (if available) and registered address
Personal identification code (or, in the absence of one, country of birth) and date of birth
Registry code in the business register (if available)
Applicable to both parties (natural person/legal person)
- The identification number of the taxable person or other equivalent code (including of foreign countries)
- VAT registration number (if available)
- The service provider’s payment account or other payment service account into which the fees are paid
- Any country or jurisdiction where the service provider is considered to be a resident
- The total amount of fees paid to the service provider in each quarter of the calendar year and the number of activities for which it was paid for
- Any fees, commissions or taxes deducted by the platform from the total amount paid to the service provider in each quarter
In doing so, the platform must also provide equivalent information about itself, including the names of all the online platforms it actually manages.
What online platforms will have to comply with the new reporting obligations under Estonia’s Tax Information Exchange Act and Taxation Act amendments?
Online and software-based platforms that connect service providers with buyers of their services or products will have to comply with the reporting obligation. This includes platforms that offer paid services such as lease or rental of an immovable, time- or task-based services, transfer of an item, or lease or rental of a means of transport.
Who is subject to the reporting obligation for tax purposes in Estonia’s sharing economy?
The reporting obligation applies to Estonian tax residents, while non-residents are required to report if their place of management or permanent place of business is in Estonia or if they are a legal arrangement established on the basis of Estonian law (e.g., a limited liability company – OÜ).
What information is required to comply with Estonia’s new reporting obligation for online platforms?
To comply with the reporting obligation, the online platform must collect and provide certain information about the service provider, including their first and last name, address in the main country of residence or jurisdiction, personal identification code or country of birth, etc.