The Estonian Parliament adopted on 23 November 2022 changes to the Income Tax Act, according to which from the year 2023 the general monthly basic tax exempt allowance is increased from EUR 500 to EUR 654 for individuals, whose annual taxable income will not exceed EUR 14 400. Thus, the annual general basic tax exempt allowance will arise from EUR 6000 to EUR 7848.
The existing order of regressive tax exempt basic allowance will generally still be applicable within the established limits of taxable income and EUR 25 200 annual income threshold will remain, above which the individual is not entitled to apply any basic tax exempt allowance to the taxable income.
The referred order for general basic tax exempt allowance is from 2023 no longer applicable to individuals who have reached the retirement age, as for such individuals there will be introduced a new monthly tax exempt allowance equal to old-age pension, which is expected to be EUR 704 per month (regardless of their annual income) from 1 January 2023.
Further information on new tax exempt allowances can be found from the website of the tax authorities:
Gifts and donations for Ukraine
With the amendment to the Income Tax Act (hereinafter: ITA), the exemption for gifts and donations made for the benefit of Ukraine will be extended for another year, until 31 December 2023. Thus, companies can provide the referred gifts and donations to non-profit entities listed by law (§ 61 (66) of ITA) on a tax exempt basis also in 2023, without taking into account the limitations prescribed by § 49 of ITA and declaring them in the Appendix 5 of form TSD.