Many entrepreneurs who have moved from one country to another no longer know exactly where they are tax resident. This is not decided by your passport, nor by the country where your company is registered. It is decided by the facts of your life and by Estonian law.
The rule is short
Estonian law sets two conditions. You are an Estonian tax resident if your place of residence is in Estonia or if you stay in Estonia for at least 183 days within 12 consecutive calendar months. One of them is enough.
The law says this directly: "A natural person is a resident if the place of residence of the person is in Estonia or if the person stays in Estonia for at least 183 days within 12 consecutive calendar months." (Income Tax Act § 6 subsection 1 — Riigi Teataja).
When the days are counted, the day of arrival and the day of departure count as well, and so do the days when you were in Estonia for only part of the day.
Your company does not make you a resident
The most common misunderstanding goes like this: "My company is in Estonia, so I am an Estonian tax resident." That is not how it works. Your residency follows your life — where your home and your family are, and where you actually live. The tax status of the company is a separate question. These are two different things.
For an owner who is an e-resident, this is the most important point. Your Estonian company may work perfectly, while your own tax residency is in the country where you really live.
Two countries may both count you as their resident
Sometimes the other country also treats you as its resident. The tax treaty between the two countries then decides which country gets the right to tax. The Estonian Tax and Customs Board states this clearly: where the residency determined under an international agreement differs from the residency under the law, the provisions of the tax treaty apply. This is how double taxation is avoided.
One simple rule keeps you out of trouble
Name the same country everywhere. The bank, the Estonian Tax and Customs Board, and the papers of your company must all show the same country. Most of the confusion comes exactly from old data in one place not matching new data in another.
If you have moved, submit an application for the determination of residency (form R) to the Estonian Tax and Customs Board. Your data is then held in the right country and the tax is calculated correctly.
This article was prepared with the help of artificial intelligence.