General Tax system in Estonia
The standard tax system in Estonia applies to all taxable persons. When ships are brought under the Estonian flag, a general tax system is established, but it is also possible to apply the state aid tonnage regime or seafarer scheme.
The following are the tax rates applicable in 2025:
- Income tax rate is 22%.
- The amount of tax-free income (up to 654 euros per month and up to 7,848 euros per year) depends on the person's income. In order to calculate tax-free income, a person must submit a written application to the employer or the payer.
- More detailed information on the calculation of tax-free income of a resident and tax-free income of a non-resident.
- In 2025, there is no income tax is on undistributed and reinvested profits.
- The corporate income tax rate applicable to dividends is 22/78.
- The social tax rate is 33%. The monthly rate on which the minimum obligation of social tax is based is 820 euros, i.e. the minimum obligation of social tax is 270,60 euros per month.
- Unemployment insurance rates are 1.6% for the employee and 0.8% for the employer.
- The contribution rate of the accumulated pension is 2%, 4% or 6% (depending on the individual's application to the pension register administrator), which is voluntary.
- More specific information about income and social taxes can be found here.
Tonnage Scheme
- When applying the tonnage tax scheme, the company’s tax liability is calculated on the basis of the net tonnage of the vessel at the disposal of the company and the actual earnings of the company are not taken into account. The tonnage tax scheme will only apply to the profit earned from the transport of goods and passengers by sea and the activities directly related to it.
- The tonnage scheme is subject to the Estonian Income Tax Act and can be applied by any company that is a resident of Estonia, provided that it meets the requirements established in § 521 of the Income Tax Act.
- To apply the tonnage scheme, the ship must meet the criteria of the tax scheme and the operator or owner of the ship must receive income from the core activities, ancillary activities or assistive activities or international carriage of goods or passengers by sea.
- The tonnage scheme can be applied until the conditions for application thereof are met, but no longer than the expiry of the respective decision of the European Commission authorising the grant of the state aid.
- Upon the expiry of the right to apply the tonnage scheme, the right to apply the tonnage scheme again arises after the expiry of the respective decision of the European Commission authorising the grant of the state aid, provided that the European Commission has granted a new authorisation for state aid and that the conditions for application of the tonnage scheme have been met.
- If, upon application of the tonnage scheme, it becomes evident that the company no longer meets the terms and conditions, or if the company decides to opt out of the tonnage scheme, the undertaking will be excluded from the state aid system and may apply the tonnage scheme again only after obtaining a new authorisation for state aid.
- State aid SA.53469 valid until 30 June 2026.
-
The tonnage scheme can be applied when:
- the total gross tonnage of the ship is at least 500 GT;
- the ship is flying the flag of a Contracting State of the European Economic Area;
- the ship is one of the following:
1) a ship used for international carriage of goods or passengers by sea, except passenger ships engaged in regular service in the European Economic Area;
2) a dredger or a tugboat, provided that the terms and conditions of subsection 6 of § 13 of the Income Tax Act are also met.
The tonnage scheme does not apply to passenger ships engaged in regular service in the European Economic Area, including cruise ships (MSOS § 2 p 19).
Regular service means voyages according to a published timetable or as regularly or as often that apparent regularity manifests itself. - the total gross tonnage of the ship is at least 500 GT;
-
Carriage of goods and passengers by sea is deemed international if more than 50% of the voyages take place:
1) between an Estonian port and a foreign port;
2) between an Estonian port and a facility located outside the territorial sea of Estonia;
3) between the ports in a foreign country or in foreign countries;
4) between a foreign port and a facility located off the shore.1. Included under the international carriage of goods and passengers by sea are the following voyages:
1.1. departure from Estonian port A, lie outs and onward movement to foreign port B;
1.2. departure from Estonian port A, berthing in an anchorage area and onward movement to foreign port B;
1.3. departure from foreign port B, lie outs and entry into foreign port D.2. Not included under the international carriage of goods and passengers by sea are the following voyages:
2.1. departure from Estonian port A, lie outs and entry into Estonian port C;
2.2. departure from Estonian port A, berthing in an anchorage area and entry into Estonian port C.3. Not deemed voyages are the following ship movements:
3.1. departure from Estonian port A, lie outs and return to Estonian port A;
3.2. departure from foreign port B, lie outs and return to foreign port B;
3.3. departure from Estonian port A, berthing in an anchorage area and return to Estonian port A;
3.4. departure from foreign port B, berthing in an anchorage area and return to foreign port B. -
The proportion of voyages takes into account the number of voyages, but not the duration of voyages.
-
An undertaking that meets the terms and conditions for the carriage of goods and passengers by sea within a calendar year in proportion to the number of months during which the tonnage scheme was applied.
-
Example:
Shipowner wants to start applying the tonnage scheme. The share of voyages undertaken by the ship in 2021 is as follows:
from 1 January 2021 to 31 May 2021, 80 voyages between Estonian ports only;
from 1 June 2021 to 31 October 2021, 75 voyages between foreign ports;
from 1 November 2021 to 31 December 2021, 25 voyages between Estonian ports only.Scenario 1.
It would be reasonable for the shipowner to start applying the tonnage scheme from 1 June 2021, because the share of foreign voyages is met from 1 June 2021:
1) if the shipowner applies the tonnage scheme from 1 June 2021 and continues to apply it in subsequent years (e.g. in 2022), then the share of foreign voyages must be met within every calendar year in proportion to the number of months during which the tonnage scheme was applied, but no longer than the expiry of a decision of the European Commission authorising the grant of the state aid;
2) if a shipowner decides to terminate the use of the tonnage scheme as at 31 December 2021, the right to reapply the tonnage scheme arises after the expiry of the respective decision of the European Commission authorising the grant of the state aid, provided that the European Commission has granted a new authorisation for state aid and that the conditions for application of the tonnage scheme have once again been met.Scenario 2.
If the shipowner applies the tonnage scheme right at the start of the year, i.e. from 1 January 2021 to 31 December 2021, then:
1) the shipowner will become subject to an additional payment at the end of the year;
2) the shipowner can apply the tonnage scheme only from 1 June 2021 to 31 December 2021;
3) the shipowner will no longer be able to apply the tonnage scheme from 1 January 2022 because the share of international carriage of goods and passengers by sea was not met and they are excluded from the state aid scheme;
the tonnage scheme can be applied again after the expiry of the respective decision of the European Commission authorising the grant of the state aid, provided that the European Commission has granted a new authorisation for state aid and that the conditions for application of the tonnage scheme have been met.
-
To apply the tonnage scheme, the operator or owner of the ship must receive income from the core activities, ancillary activities or assistive activities or international carriage of goods or passengers by sea.
-
Core activities
-
Core activities of international carriage of goods or passengers by sea are:
1. carriage of goods or passengers for a fee;
2. granting cabins for use for a fee;
3. sale of food and drinks for immediate consumption on board;
4. granting a ship for use for a fee on the basis of a charter party (hereinafter referred to as chartering out), except chartering out on the basis of a bareboat charter party.
| Chartering out a ship on the basis of a bareboat charter party constitutes an activity eligible for aid. For more information see the chapter „Assistive activities“. |
-
Ancillary activities
-
Ancillary activities of international carriage of goods or passengers by sea are:
1. provision of services or sale of goods, usually on a passenger ship, provided that these activities are directly related to the carriage of passengers by sea;
2. salvage;
3. loading, unloading and securing of cargo if these activities are carried out by crew members of a resident company;
4. granting containers or other tanks for use for a fee;
5. renting out a space on board to a seller of goods or a provider of services;
6. granting an advertising space on board for use for a fee;
7. mediation of sightseeing during a voyage to a passenger on a ship, provided that the passenger’s cabin remains in his/her use.
| Income received from the ancillary activities is taxed according to the tonnage scheme if the income received from such activities does not exceed 50% of the total income received from the international carriage of goods or passengers by sea (core activities, ancillary activities and other activities eligible for aid). |
-
-
Assistive activities
-
In addition to core activities and ancillary activities, the following shall also be deemed to be international carriage of goods or passengers by sea:
1. crew or technical management of a ship;
2. chartering out a ship on the basis of a bareboat charter party to an undertaking in a Contracting State which belongs to the same group as the company provided that:
o the reason for chartering out is the excess capacity of the tonnage of a ship temporarily not used in business by a resident company due to other reasons than purchasing or chartering a ship for the purpose of chartering it out;
o the ship is chartered out for no longer than three years;
o the chartering out does not exceed 50% of the gross tonnage of the ships used by the resident company and included in the calculation of the tonnage scheme;
3. activities carried out with a dredger or a tugboat outside the port and the territorial sea of Estonia if more than 50% of the operational time of the dredger or tugboat is spent in maritime transport.
The tonnage scheme can be applied by a resident company, provided that it meets the terms and conditions established in § 521 of the Income Tax Act.
1. Requirements for resident companies
- A resident company can apply the tonnage scheme if:
1. it has taken over the liability for managing the maritime safety and technical service of a ship meeting the terms and conditions of the tonnage scheme and has a corresponding certificate;
2. it receives income from the core activities, ancillary activities or assistive activities or international carriage of goods or passengers by sea.
3. the decisions related to the management of the crew are made in a Contracting State of the European Economic Area;
4. the strategic, business and technical management decisions related to the operation of the ship are made in Estonia. - Resident company and group
In order to implement the tonnage scheme, the ships used by the resident company and the undertakings belonging to the same group as the company and included in the calculation of the tonnage scheme shall meet the following conditions:
1. at least 25% of the gross tonnage of the ships must be owned by the company and the undertakings belonging to the same group as the company or used by them on the basis of a bareboat charter party;
2. at least 60% of the gross tonnage of the ships, including all dredgers and tugboats, must be registered under the flag of a Contracting State of the European Economic Area.
2. Requirements for resident companies that provide crew management services
- The tonnage scheme can also be applied by a resident company receiving income from the provision of crew management services of a ship meeting the terms and conditions of the tonnage scheme if:
1. the provider of the crew management service makes management decisions in Estonia and fully adheres to and applies all the requirements of the Maritime Labour Convention of the International Labour Organization;
2. all the ships and crews managed by the service provider specified in clause 1 comply with international standards and requirements arising from the law of the European Union related to the maritime security and safety, training and certification of seafarers, environmental conservation and working conditions on a ship;
3. at least 60% of the gross tonnage of ships included in the calculation of the tonnage scheme used by the company and the undertakings belonging to the same group as the company, including all dredgers and tugboats, has been registered under the flag of a Contracting State of the European Economic Area;
4. the service provider has at least one technical manager and four other employees for technical management of up to ten ships and at least two technical managers and eight other employees for technical management of more than ten ships;
5. at least 51% of the employees specified in the above clause are citizens of a Contracting State of the European Economic Area.
3. Requirements for resident companies that provide technical ship management services
- The tonnage scheme can also be applied by a resident company receiving income from the provision of technical ship management services of a ship meeting the terms and conditions of the tonnage scheme if:
1. the provider of the technical management service makes management decisions in Estonia, has taken over the liability for managing the maritime safety and technical service of the ship and has a corresponding certification;
2. all the ships and crews managed by the service provider specified in clause 1 comply with international standards and requirements arising from the law of the European Union related to the maritime security and safety, training and certification of seafarers, environmental conservation and working conditions on a ship;
3. at least 60% of the gross tonnage of ships included in the calculation of the tonnage scheme used by the company and the undertakings belonging to the same group as the company, including all dredgers and tugboats, has been registered under the flag of a Contracting State of the European Economic Area;
4. the service provider has at least one technical manager and four other employees for technical management of up to ten ships and at least two technical managers and eight other employees for technical management of more than ten ships;
5. at least 51% of the employees specified in the above clause are citizens of a Contracting State of the European Economic Area.
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Upon implementation of the tonnage scheme, the amount of the income subject to tax is calculated for each ship complying with the conditions provided for of the person implementing the tonnage scheme per 24-hour period that has started, irrespective of whether or not the ship is used.
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The amount of the income subject to tax is calculated as the product of the net tonnage of the ship used by the person implementing the tonnage scheme and the corresponding ratio as follows:
a) for the first 1,000 net tons – 0.0084 euros per day;
a) for the first 1,001-10,000 net tons – 0.0062 euros per day;
a) for the first 10,001-25,000 net tons – 0.0040 euros per day;
a) from 25,001 net tons – 0.0020 euros per day. -
The coefficient of the income subject to tax depends on the age of the ship:
a) 50% for ships not older than five years;
b) 75% for ships older than five years but not older than ten years;
c) ship 100% for ships older than ten years.
|
Net tonnage |
Ship’s net tonnage e.g 30,000 |
Ship older than 10 years (100% coefficient), euros |
Ship 5-10 years old (75% coefficient), euros |
Ship up to 5 years old (50% coefficient), euros |
|||
|
up to 1,000 |
1,000 x |
x 0.0084 |
8.4 |
x 0.0063 |
6.3 |
x 0.0042 |
4.2 |
|
1,001 to 10,000 |
9,000 x |
x 0.0062 |
55.8 |
x 0.00465 |
41.9 |
x 0.0031 |
27.9 |
|
10,001 to 25,000 |
15,000 x |
x 0.0040 |
60 |
x 0.0030 |
45 |
x 0.0020 |
30 |
|
from 25,001 |
5,000 x |
x 0.0020 |
10 |
x 0.0015 |
7.5 |
x 0.0010 |
5 |
|
Taxable income per day: |
134.2 |
100.65 |
67.1 |
||||
|
Taxable income per year (365 days): |
48,983.00 |
36,737.25 |
24,491.50 |
||||
|
Income tax obligation in calendar year: |
9,796.60 |
7,347.45 |
4,898.30 |
||||
Note! The calculations provided are only for demonstrative purposes. Income tax liability is calculated by the Estonian Tax and Customs Board upon declaration of income subject to the ship data and data provided by the resident company and the terms and conditions provided for by law.
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The undertaking (person implementing the tonnage scheme) must submit to the tax authority by the 10th date of the calendar month following the application of the tonnage scheme all the data needed to transition to and apply the tonnage scheme.
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The tax liability is calculated automatically for the codes 8108-8111 of Annex 8 of form TSD on a monthly basis using the ship data and ratios established by law. Guidelines for completing Annex 8 of form TSD can be found here (income received from international carriage of goods and passengers by sea).
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The Estonian Transport Administration together with the Estonian Tax and Customs Board verify compliance with the terms and conditions of the tonnage scheme and provide advice.
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To apply the tonnage scheme, a resident company must submit an application detailing the activity based on which they wish to apply the tonnage scheme, as well as the data of the ship and the person implementing the tonnage scheme. The application must be sent to: estonianflag@transpordiamet.ee.
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The applicant can apply the tonnage scheme only after they receive a positive decision from the Estonian Transport Administration.
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The Estonian Tax and Customs Board advises on issues related to the declaration of tax liability of resident companies (regarding transition to the tonnage scheme, application of the tonnage scheme, etc.): ariklient@emta.ee.
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The requirements established § 521 of the Estonian Income Tax Act must be complied with throughout the period of application for the tonnage scheme.
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The application of the tonnage scheme must be terminated from the date from which the company and/or ship no longer meet the requirements established in Estonian Income Tax Act.
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The Estonian Transport Administration together with the Tax and Customs Board verify compliance with the requirements established in Income Tax Act, meaning that the Estonian Transport Administration and the Tax and Customs Board have the right to verify compliance with the statutory requirements and require proof thereof when tonnage scheme is applied.
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Pursuant to Estonian Taxation Act, a taxable person is required to preserve documents related to transactions and payments and other documents relevant for taxation purposes for at least 7 years.
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If you have any questions, please email estonianflag@transpordiamet.ee.
Seafarer scheme
- The seafarer scheme is a labour tax incentive that can be applied:
- by companies who are Estonian residents (e.g. the shipowner, person providing technical ship management or crew management services);
- non-resident operating in Estonia as an employer;
- if a non-resident has a permanent establishment in Estonia.
- Application of labour tax incentives results in tax liability in Estonia.
-
The seafarer scheme can be applied until the conditions for application thereof are met, but no longer than the expiry of a decision of the European Commission authorising the grant of the state aid.
- The seafarer scheme applies to ships used for international carriage of goods or passengers by sea. The activities of international carriage of goods or passengers by sea are provided for in subsections 6, 7 and 9–11 or in subsection 13 of 521 of the Income Tax Act.
- Upon the expiration of the right to apply the seafarer scheme, if there is a wish to reapply for the seafarer scheme again, it is necessary to submit a new application to the Transport Administration. As part of this process, the ship's eligibility for state aid under the seafarer scheme will be reassessed.
- The person applying the seafarer scheme may not be an undertaking in difficulty within the meaning of Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty established by the European Commission.
- An undertaking also must not have failed to perform an obligation to repay the state aid declared illegal and incompatible with the internal market on the basis of the decision of the European Commission.
- State aid SA.53469 is valid until 30 June 2026.
-
An undertaking also must not have failed to perform an obligation to repay the state aid declared illegal and incompatible with the internal market on the basis of the decision of the European Commission.
-
State aid SA.53469 is valid until 30 June 2026.
- The seafarer scheme can be applied when:
- the total gross tonnage of the ship is at least 500;
- the ship is flying the flag of a Contracting State of the European Economic Area;
- the ship is one of the following:
1) a ship used for international carriage of goods or passengers by sea, except passenger ships engaged in regular service in the European Economic Area;
2) a dredger or a tugboat, provided that the terms and conditions of subsection 6 of § 13 of the Income Tax Act are also met.
|
The seafarer scheme does not apply to passenger ships engaged in regular service in the European Economic Area, including cruise ships. Regular service means voyages according to a published timetable or as regularly or as often that apparent regularity manifests itself (clause 19 of § 2 of the Maritime Safety Act). A passenger ship engaged in non-regular chartered voyages for the purposes of § 521 of the Income Tax Act may apply labour tax incentives. |
- Carriage of goods and passengers by sea is deemed international if more than 50% of the voyages take place:
1) between an Estonian port and a foreign port;
2) between an Estonian port and a facility located outside the territorial sea of Estonia;
3) between the ports in a foreign country or in foreign countries;
4) between a foreign port and a facility located off the shore.
|
1. Included under the international carriage of goods and passengers by sea are the following voyages: 2. Not included under the international carriage of goods and passengers by sea are the following voyages: 3. Not deemed voyages are the following ship movements: |
- The proportion of voyages takes into account the number of voyages, but not the duration of voyages.
- Upon application of the seafarer scheme, the share of foreign voyages must be performed within a calendar year in proportion to the number of months during which the seafarer scheme was applied.
- If, upon application of the seafarer scheme, it becomes evident that the user of the tax incentive no longer meets the terms and conditions established in the Income Tax Act, or if the company decides to stop using the labour tax benefit, the undertaking will be excluded from the state aid system and may apply the seafarer scheme again only after obtaining a new authorisation for state aid.
- Example:
The shipowner wants to start applying the seafarer scheme. The share of voyages undertaken by the ship in 2021 is as follows:
from 1 January 2021 to 31 May 2021, 80 voyages between Estonian ports only;
from 1 June 2021 to 31 October 2021, 75 voyages between foreign ports;
from 1 November 2021 to 31 December 2021, 25 voyages between Estonian ports only
Scenario 1.
It would be reasonable for the shipowner to start applying tthe seafarer scheme from 1 June 2021, because the share of foreign voyages is met from 1 June 2021:
1. if the shipowner applies the the seafarer scheme from 1 June 2021 and continues to apply it in subsequent years (e.g. in 2022), then the share of foreign voyages must be met within every calendar year in proportion to the number of months during which the the seafarer scheme was applied, but no longer than the expiry of a decision of the European Commission authorising the grant of the state aid;
2. if a shipowner decides to terminate the use of the seafarer scheme as at 31 December 2021, the right to reapply the the seafarer scheme for crew members arises after the expiry of the respective decision of the European Commission authorising the grant of the state aid, provided that the European Commission has granted a new authorisation for state aid and that the conditions for application of the the seafarer scheme have once again been met.
Scenario 2.
If the shipowner applies the the seafarer scheme right at the start of the year, i.e. from 1 January 2021 to 31 December 2021:
1. the shipowner will become subject to an additional payment at the end of the year;
2. the shipowner can apply the tax incentive only from 1 June 2021 to 31 December 2021;
3. the shipowner will no longer be able to apply the the seafarer scheme from 1 January 2022 because the criterion of international carriage of goods and passengers by sea was not met and they are excluded from the state aid scheme;
the the seafarer scheme can be applied again after the expiry of the respective decision of the European Commission authorising the grant of the state aid, provided that the European Commission has granted a new authorisation for state aid and that the conditions for application of the the seafarer scheme have been met.
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The seafarer scheme applies to ships used for international carriage of goods or passengers by sea.
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Core activities of international carriage of goods or passengers by sea are:
1. carriage of goods or passengers for a fee;
2. granting cabins for use for a fee;
3. sale of food and drinks for immediate consumption on board;
4. granting a ship for use for a fee on the basis of a charter party (hereinafter referred to as chartering out), except chartering out on the basis of a bareboat charter party.
| Chartering out a ship on the basis of a bareboat charter party constitutes an activity eligible for aid. For more information see the chapter „Assistive activities“. |
-
-
Ancillary activities of international carriage of goods or passengers by sea are:
1. provision of services or sale of goods, usually on a passenger ship, provided that these activities are directly related to the carriage of passengers by sea;
2. salvage;
3. loading, unloading and securing of cargo if these activities are carried out by crew members of a resident company;
4. granting containers or other tanks for use for a fee;
5. renting out a space on board to a seller of goods or a provider of services;
6. granting an advertising space on board for use for a fee;
7. mediation of sightseeing during a voyage to a passenger on a ship, provided that the passenger’s cabin remains in his/her use.
| Income received from the ancillary activities is taxed according to the seafarer scheme if the income received from such activities does not exceed 50% of the total income received from the international carriage of goods or passengers by sea (core activities, ancillary activities and other activities eligible for aid). |
-
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Assistive activities are in addition to core activities and ancillary activities, the following shall also be deemed to be international carriage of goods or passengers by sea:
1. crew or technical management of a ship;
2. chartering out a ship on the basis of a bareboat charter party to an undertaking in a Contracting State which belongs to the same group as the company provided that:
o the reason for chartering out is the excess capacity of the tonnage of a ship temporarily not used in business by a resident company due to other reasons than purchasing or chartering a ship for the purpose of chartering it out;
o the ship is chartered out for no longer than three years;
o the chartering out does not exceed 50% of the gross tonnage of the ships used by the resident company and included in the calculation of the tonnage scheme;
3. activities carried out with a dredger or a tugboat outside the port and the territorial sea of Estonia if more than 50% of the operational time of the dredger or tugboat is spent in maritime transport.
·
- If a crew member works on a ship that meets the terms and conditions provided for in the Income Tax Act, their remuneration can be taxed as follows:
1) income tax 0%;
2) remaining labour taxes are calculated on a tax base of 750 euros:
social tax 20%;
o unemployment insurance premiums: employee 1.6%; employer 0.8%;
o contributions to the II pillar funded pension 2% (voluntary).
- Example calculation of gross monthly remuneration under the regular remuneration system and under the special rax regime.
|
Taxes |
Based on the general tax system, the tax base would be gross salary per month |
Based on the labour tax benefit, the tax base is 750 euros and VAT is 0% |
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|
Tax base |
% |
EUR |
Tax base |
% |
EUR |
|
|
Social tax: |
For example 3000 euros |
33 |
990 |
750 euros |
20 |
150 |
|
Unemployment insurance premium (employer): |
0.8 |
24 |
0.8 |
6 |
||
|
Income tax: |
22 |
636,24 |
0 |
0 |
||
|
Unemployment insurance premium (employee): |
1.6 |
48 |
1.6 |
12 |
||
|
Funded pension (II pillar): |
2 |
60 |
2 |
15 |
||
|
Employee’s taxes per months: |
744,24 |
27 |
||||
|
Employee’s net salary: |
2 255,76 |
2,973 |
||||
|
Employer’s total taxes per month: |
1,014 |
156 |
||||
|
Employer’s cost per s month: |
4,014 |
3,156 |
||||
NB! Calculations are illustrative. The labor tax liability depends on the data provided by the applicant (natural person or resident company), the time worked and the conditions stipulated by law.
- Social security tax
- Crew members are not subject to compulsory health insurance, meaning that the employer is exempt from paying the health insurance component of the social tax (13%).
- Crew members are free to enter into a voluntary health insurance contract with the Estonian Health Insurance Fund. Permanent residents of Estonia and persons living in Estonia under a temporary residence permit or right of residence may enter into such a contract.
- For more information see the website of the Estonian Health Insurance Fund. The website of the Estonian Tax and Customs Board also has more information on the seafarer scheme and the tonnage scheme.
- Payment of social tax and unemployment insurance premiums to a foreign country
- Social tax and unemployment insurance premiums can be paid to the home country of a crew member if they have been issued with social insurance form A1 or E101 (by a contracting party of the EEA, incl. Switzerland) or a similar document (country with which a social insurance contract has been entered into: Ukraine, Canada, Australia), as a result of which no social insurance tax liability on remuneration arises in Estonia.
- An A1 (E101) form is always issued by a person’s country of residence. If, in addition to working in another country, you work in Estonia, but do not live here, you must apply for an A1 form from the social security institution of your country of residence.
- For more information see the website of the Estonian Social Insurance Board, the Estonian Labour Inspectorate and the state portal eesti.ee.
- II pillar funded pension
- The II pillar funded pension (2%) is voluntary.
- This contribution is mandatory to all resident natural persons who are required by law to do so or have joined the II pillar funded pension and have submitted an application for continuation of contributions (if they are residents of Estonia or stay in Estonia for at least 183 days in 12 consecutive months).
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To apply the seafarer scheme, the employer must submit to the Estonian Transport Administration an application with a copy of the ship’s documentation bearing the ships IMO number, name, type, flag and gross tonnage.
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The application must be made from the date they wish the special tax regime to be enforced.
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After receiving the application, the Estonian Transport Administration verifies the correctness and compliance of the submitted information and makes a decision. It may take up to 30 calendar days to review the application, conduct the necessary data verification and prepare a decision. It is necessary to consider the time required by the Tax and Customs Board to verify data. The decision will be made and delivered at the earliest opportunity.
-
Once an application is received, the Estonian Transport Administration will verify the accuracy and compliance of data and make a decision.
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If the ship qualifies for the special tax regime:
1. the Estonian Transport Administration will notify the employer and send to the Tax and Customs Board the data provided by the applicant;
2. after receiving a positive reply, the employer must enter the employee(s) in the employment register maintained by the Tax and Customs Board;
3. once employees are entered in the employment register, the employer may pay remuneration pursuant to the special tax regime for crew members;
4. employees must have an Estonian personal identification code to be entered in the employment register;
5. you can find more information on the creation of personal identification codes on the website of the Ministry of the Interior (personal identification code) as well as here. -
If a ship is not subject to the special tax regime, the Estonian Transport Administration will notify the applicant thereof.
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The seafarer scheme is applied on a ship-by-ship basis. If, following the submission of a relevant application, a crew member takes up position on another ship which is subject to the seafarer scheme, but which data have not been submitted to the Estonian Transport Administration, a new application must be prepared.
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The requirements established in the Income Tax Act must be complied with throughout the period of application of the special tax regime for crew members. The application of the seafarer scheme must be terminated from the date from which the ship no longer meets the requirements established in the Income Tax Act.
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Example. After applying for the special tax regime and receiving a positive reply, a cargo ship is chartered to Turkey, where it will sail under the flag of the Republic of Turkey. Since this no longer meets the requirement provided in clause 2 of subsection 5 of § 13 of the Income Tax Act (regarding flying the flag of a Contracting State) the application of the seafarer scheme must be terminated from the day the flag is changed.
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The Estonian Transport Administration together with the Tax and Customs Board verify compliance with the requirements established in the Income Tax Act, meaning that the Estonian Transport Administration and the Tax and Customs Board have the right to verify compliance with the statutory requirements and require proof thereof from the applicant when the special tax regime is applied.
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Pursuant to Estonian Taxation Act, a taxable person is required to preserve documents related to transactions and payments and other documents relevant for taxation purposes for at least 7 years.
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If you have any questions, please email estonianflag@transpordiamet.ee.
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If a crew member wishes to apply for the the seafarer scheme, it is the applicant's own responsibility to familiarize himself with and be aware of the conditions for using the state aid measure. Also, to comply with them and, if necessary, to submit additional materials, as well as to inform the authorities involved if the circumstances change. The conditions regarding compliance with the application of the state aid measure can be found in the "SHIP TERMS AND CONDITIONS" section.
- To apply the special tax regime, a digitally signed application must be submitted to the Transport Administration at e-mail info@transpordiamet.ee.
- The Estonian Transport Administration together with the Tax and Customs Board verify compliance with the requirements established in the Income Tax Act, meaning that the Estonian Transport Administration and the Tax and Customs Board have the right to verify compliance with the statutory requirements and require proof thereof from the applicant when the special tax regime is applied.
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The seafarer scheme is applied on a ship-by-ship basis. If, following the submission of a relevant application, a crew member takes up position on another ship, a new application must be prepared.
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If the ship is not subject to the special tax regime, the Transport Administration will inform the applicant.
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Based on the Tax Administration Act, the taxpayer is obliged to keep documents related to transactions and payments and other documents that are significant from taxation point of view for at least 7 years.
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After receiving the application, the Estonian Transport Administration verifies the correctness and compliance of the submitted information and provides an answer to the applicant. It may take up to 30 calendar days to review the application, conduct the necessary data verification and prepare an answer. It is necessary to consider the time required by the Tax and Customs Board to verify data. The decision will be made and reply delivered at the earliest opportunity
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If you have any questions, please contact us at the e-mail address: estonianflag@transpordiamet.ee
To benefit from the seafarer income tax relief, an individual who is a tax resident of Estonia must be employed on a vessel that qualifies under the criteria set for this tax measure. The conditions regarding the compatibility of the implementation of the State aid measure can be found under “SHIP TERMS AND CONDITIONS”. The process consists of the following steps:
1. Submission of application
- The individual needs to download the Seafarer Tax Relief Application Form, complete all required fields and sign it digitally.
- The completed application must be submitted via email at: info@transpordiamet.ee.
2. Decision by the Estonian Transport Administration
- The Transport Administration will review the submitted application and issue a formal decision.
- If approved, the positive decision will be forwarded both to the applicant and to the Estonian Tax and Customs Board.
- If additional information is required, the Transport Administration will contact the applicant directly.
3. Declaration with the Estonian Tax and Customs Board
- In cases where the individual is an Estonian tax resident and is employed by a foreign company, the seafarer can declare his/her wages with a 0% income tax rate, provided that a positive decision from the Transport Administration has been received.
- These wages must be declared in Table 7.3 of the annual income tax return.
- The declaration must clearly include the IMO number of the vessel for which the positive decision was issued.
- Additional guidance regarding tax declarations is available on the official website of the Estonian Tax and Customs Board: Tax and Customs Board – Special Regime for Seafarers.
Support for international passenger shipping
The international passenger shipping measure supports the competitiveness of the European Economic Area's passenger shipping sector by maintaining jobs and supporting the development of the economy, export, tourism and the passenger ship sector.
At the end of 2023, the European Commission satisfied the application of extension of the previous international passenger shipping state aid measure (original state aid approval reference - State Aid SA.57541). The renewed state aid approval is valid for the period from 01.01.2024 to 31.12.2028 (renewed state aid approval reference - State aid SA.110032).
In 2025, the amount of the subsidy is 2 million euros, which will be paid out by the 20th day of the second month following the third quarter (by 20th November). Additional information regarding subsequent disbursements will be provided at a later stage.
- The support for international passenger shipping is granted to eligible undertakings to reimburse the expenses of employer for social and income tax quarterly, who fulfil the following criteria:
1) work on a passenger ship operating international regular services in the European Economic Area;
2) fly the flag of a European Economic Area contracting state;
3) the ship/application's gross tonnage is at least 500;
4) an Estonian company pays social security contributions in Estonia.
- The applicant is not an undertaking in difficulty within the meaning of Guidelines on State aid for rescuing and restructuring non-financial undertakings in difficulty by the European Commission. The annual financial statements must be submitted either by the applicant with the application or it should be possible to find it in the Business Register. The undertaking has not failed to perform the obligation to reimburse the State aid declared illegal and incompatible with the internal market based on a decision of the European Commission.
- The relevant ministerial regulation concerning the passenger ship support measure can be found here.
Support for the international passenger shipping can be requested as long as the conditions are met but no longer than permitted by European Commission’s decision to grant the aid.
- The applicant submits a digitally signed application to the authority for obtaining support for the previous quarter by the 10th day of the second month following the support period to the address info@transpordiamet.ee and shall also include information on the standing vessels in encrypted form (Excel table).
- Separate decisions will be made for all applications, indicating the compliance of the applicant with each point of the regulation to be checked, along with the calculated amount of support.
- Upon making a decision to approve the application, the Transport Administration shall transfer the subsidy to the applicant’s advance payment account at the Estonian Tax and Customs Board by the 20th day of the second month following the support period.
- In case of questions, please contact us at the email address: info@transpordiamet.ee
Last updated: 27.08.2025
