According to Income Tax Act § 502 a resident company shall pay income tax on a loan granted to a shareholder, partner or member of the company if the circumstances of the transaction refer that this may constitute a hidden profit distribution.

New rule from January in 2018 in Income Tax Act!

If the term for repayment of a loan granted to a parent company or so-called subsidiary company is more than 48 months, the taxpayer is required, upon request of the tax authority, to prove the repayment ability and intention of the loan within 30 days.

New rules are applicable to a loan granted from July 1, 2017, as well as a loan for which the loan amount has been increased from July 1, 2017, the loan repayment term extended or other material conditions changed.

Notification of loan granted to associated person

A resident company and permanent establishment of a non-resident company located in Estonia are required to submit a tax return regarding the loans granted to the persons specified in § 502and repayment thereof during the previous quarter to the Tax and Customs Board by the twentieth day of the month following the quarter.

The first declaration need to be submitted on April 20th in 2018.