Estonia Introduces Advance Tax Rulings

Introduction

On 15 February 2007, Estonian parliament (in Estonian Riigikogu) made amendments to the Taxation Act. Among other amendments, a new advance ruling institution was introduced into legislation. Request for an advance ruling from a tax authority will be made available on 1 January 2008.

An advance ruling represents a binding assessment issued by the Estonian Tax and Customs Board regarding taxation of a specific transaction or set of transactions completed in the future by a specific taxable person. It is essential that the assessment be enquired prior to performing the operation (i.e. transaction). Furthermore, the enquiry should not be theoretical; the taxable person should intend to factually complete this transaction. The assessment issued by the Tax and Customs Board is binding to the board, that is, in the case of later tax control of the taxable person, in the same circumstances a tax authority must follow taxation described in the advance