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Income Tax Act
Passed 15.12.1999
RT I 1999, 101, 903
Entry into force 01.01.2000

(excerpts)

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§ 11. List of non-profit associations, foundations and religious associations benefiting from income tax incentives
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]

(1) The list of non-profit associations, foundations and religious associations benefiting from income tax incentives (hereinafter list) shall be approved by a resolution of the Tax and Customs Board after obtaining a recommendation from a committee of experts.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(2) A non-profit association, foundation or religious association (hereinafter association) which meets the following requirements shall be entered in the list:
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]
1) the association operates in the public interest;
2) the association operates for charitable purposes, offering goods, services or other benefits primarily free of charge or in another non-revenue seeking or publicly accessible manner;
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]
3) the association does not distribute its assets or income, grant monetarily appraisable benefits to its founders, members, members of the management or controlling body (§ 9), persons who have made a donation to the association during the last twelve months or to the members of the management or controlling body of such person or to the persons associated with such persons and listed in clause 8 (1) 1);
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]
4) upon dissolution of the association, the assets remaining after satisfaction of the claims of the creditors shall be transferred to an association entered in the list or specified in subsection (10) or to a legal person in public law;
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]
5) the administrative expenses of the association correspond to the character of its activity and the objectives set out in its articles of association;
6) the remuneration paid to the employees and members of the management or control body of the association (§ 9) does not exceed the amount of remuneration normally paid for similar work in the business sector.

(3) The requirement specified in clause (2) 3) does not apply to an association engaged in social welfare, to a religious association or to a case where a person specified in clause (2) 3) belongs to the target group of the association and does not receive additional benefits as compared with other persons belonging to the target group. The requirement specified in clause (2) 4) does not apply to religious associations established in Estonia and religious associations established in another Contracting State of the EEA Agreement (hereinafter Contracting State) which comply with § 27 of the Churches and Congregations Act.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(4) An association shall not be entered in the list if:
1) it does not operate in accordance with its articles of association;
11) it has not operated by the time of submission of the application for entry in the list for at least six months and submitted an annual report for this period;
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]
2) the documents submitted for entry in the list do not conform to the requirements established by legislation;
3) it does not use the revenue received from economic activity primarily for the purposes provided for in clauses 11 (2) 1) and 2);
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]
4) it is engaged in advertising the goods or services of a founder or donor, or promotion of the professional activity or business of a person in the target group;
5) it has tax arrears for which no payment schedule has been arranged;
6) it has repeatedly failed to submit, by the term or pursuant to the procedure prescribed by legislation, a report or tax return, or it has repeatedly delayed payment of tax;
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]
7) it is being terminated or bankruptcy proceedings have been brought against it;
8) it is engaged in business support or mainly in support of the representatives of some profession or if it is a trade union or political association. An association is deemed to be a political association if it is a political party or election coalition or if the main objective or the principal activity of the association is organising campaigns or collecting donations for or against a political party or election coalition or a person running for an elected or appointed office for the performance of public duties.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(41) The conditions specified in clause (4) 11) do not apply to a congregation, monastery or institution of a church operating on the basis of an international agreement which belongs to a church or association of congregations entered in the list.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(5) The requirement specified in clause (4) 4) does not apply if the association provides, based on a contract, advertising services at the market price.

(6) [Repealed – RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(7) The Tax and Customs Board has the right to delete an association from the list if:
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]
1) the activity of the association does not meet the requirements set forth in subsection (2);
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]
2) the circumstances specified in subsection (4) become evident, which are not specified in subsection (71);
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]
3) the association has failed to notify the Tax and Customs Board of such amendment of its articles of association as a result of which the association no longer meets the requirements for the entry in the list within thirty days after the date of entry of the amendment in the register of non-profit associations and foundations, or
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]
4) the violation of the condition for payment of scholarships and grants provided for in subsection 19 (6) or (7) has been established.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(71) An association shall be deleted from the list if:
1) it has submitted a written application therefor;
2) it has failed to submit at least for three consecutive times, by the term or pursuant to the procedure prescribed by legislation, a report or tax return, or it has delayed payment of amount of tax at least for three consecutive times;
3) it is dissolved.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(8) The minister responsible for the area shall establish, by a regulation, the procedure for compiling the list, a list of documents to be submitted for such purpose, the procedure for entry in and deletion from the list of associations, the procedure for formation of the expert committee, its rules of procedure, and the procedure for appointment and removal of the members of the committee.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(9) An application for entry in the list shall be submitted to the Tax and Customs Board by 1 March or 1 September. After obtaining the recommendations of the expert committee, the Tax and Customs Board shall inform the association by 1 May or 1 November respectively of a resolution to deny entry in the list or to delete the association from the list. The association shall be entered in the list or shall be deleted from the list as of 1 July or 1 January respectively.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(10) An association established in another Contracting State is deemed to be an association benefiting from income tax incentives if it is supported by sufficient evidence that it meets the requirements set forth in subsection (2) and no circumstances specified in clauses (4) 1), 3)–5), 7) and 8) do not exist.
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]

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§ 51. Income tax on expenses not related to business and activities specified in articles of association
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

(1) A resident company shall pay income tax on expenses not related to business unless income tax has been paid on such expenses in accordance with §§ 48 –50 of this Act.

(2) For the purposes of subsection (1), expenses not related to business are:
1) expenses or payments specified in clauses 34 3)–6) and 11);
[RT I 2003, 88, 587 - entry into force 01.01.2004]
2) enrolment and membership fees paid to non-profit associations, unless participation in such associations is directly related to the business of the taxpayer;
3) payments concerning which the taxpayer does not have a source document in compliance with the requirements prescribed in legislation regulating accounting;
4) expenses incurred or payments made in order to purchase services not related to the business of the taxpayer;
5) expenses incurred or payments made in order to fulfil obligations not related to the business of the taxpayer.

(3) A resident non-profit association, foundation or religious association which is a legal person shall pay income tax on expenses and payments specified in clauses (2) 1) and 3) and in § 52 and on expenses incurred in purchasing services or property not related to the activities specified in the person’s articles of association (including business permitted by the articles of association).

(4) [Repealed – RT I 2008, 51, 286 - entry into force 01.01.2009]

(5) Expenses specified in subsection 13 (3) are not deemed to be expenses not related to business.
[RT I, 11.07.2014, 5 - entry into force 01.01.2015]

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§ 61.  Other implementing provisions

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(41) A legal person entered in the register of religious associations as at 31 December 2010 is entered in the list of non-profit associations, foundations and religious associations benefiting from income tax incentives as of 1 January 2011 without submitting any applications. The aforementioned person shall submit the declaration provided for in subsection 571 (3) for the first time by 1 July 2012.
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]

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