- Updated
- October 2025
- Sections
- 15
- Questions
- 47
Key Facts
Core Framework
Subsection 50 (4) of the Income Tax Act
Article 20 of the Transfer Pricing Regulation
The TPG have no legal status within the Estonian tax system. However, they have been translated into Estonian and, according to Article 20 of the Regulation no. 53 (Transfer Pricing Regulation) drafted by MoF (in force since 1.01.2007), taxpayers and tax administrations are encouraged to use the TPG for those situations not covered by the Transfer Pricing Regulation, as far as the guidance in the TPG is not in contradiction with it.
Articles 3 and 20 of the Transfer Pricing Regulation
Article 3 of the Transfer Pricing Regulation lays the foundation for comparability analysis. According to Article 20, it is recommended to follow the TPG.
Subsection 3 (3) of the Transfer Pricing Regulation
Upon comparing transactions, data of transactions between the taxpayer and a non-associated person shall generally be preferred to the data of transactions between a third party and a non-associated person, and data in Estonian databases shall be preferred to data in databases of foreign states.
Subsection 18 (4) of the Transfer Pricing Regulation
The comparable data necessary to determine the market value of the transfer price must be available to both the tax authorities and the taxpayer.
Subsections 11 (8) and 2 (6) of the Transfer Pricing Regulation
The transfer price shall be considered conformant to the market value if it is within the price range determined on the basis of the comparison data. If the transfer price is outside such price range, the tax administrator shall have the right to correct the transaction price in such a way that the result is within the price range. If the determined price range of market values is very wide, the analysis shall be repeated with more specific data or with other methods. Price range shall mean a series of results in interquartile range determined with the same method of determining the transfer price using different comparable data or with different methods of determining the transfer price.
Documentation
Article 18 of the Transfer Pricing Regulation; Article 20^3 of the Tax Information Exchange Act
Article 18 of the Transfer Pricing Regulation; Article 20^3 of the Tax Information Exchange Act
Article 18 of the Transfer Pricing Regulation; Article 20^3 of the Tax Information Exchange Act
Articles 153^1 and 154 of the Taxation Act; Subsection 44 (8) of the Penal Code
There are no special transfer pricing penalties. The law provides for penalties in case of concealment of tax liability and increase of claim for refund without basis. Failure to submit information to a tax authority intentionally or submission of false information if the tax or withholding obligation is decreased thereby or the claim for refund is increased is punishable by a fine of up to EUR 32 000 (Article 153^1 of the Taxation Act). In case of obstruction of activities of the tax authority (failure to submit a tax return, other document or thing by the due date, failure to register with a tax authority, failure to comply with the requirements for the keeping of records or failure to comply with an order of a tax authority) the fine is up to EUR 3 200 (Article 154 of the Taxation Act). Intentional submission of wrong information in tax return may also cause criminal proceedings where the fine is up to EUR 16 million (Article 44 of the Penal Code).
TP Methods
- CUP
- Resale Price
- Cost Plus
- TNMM
- Profit Split
- Other
Selection: Most appropriate method
Dispute Resolution
Article 87 of the Administrative Procedure Act; Article 19 of the Transfer Pricing Regulation; Estonia’s MAP Profile
Currently, there are no provisions enabling taxpayers to negotiate APAs with the tax authorities. Disputes are generally resolved between taxpayers and the tax authorities. If they fail to reach an agreement, the taxpayer has the right to turn to administrative court. Cross-border disputes may also be subject to MAPs. For further information, please refer to Estonia’s MAP Profile.
Article 87 of the Administrative Procedure Act; Article 19 of the Transfer Pricing Regulation; Estonia’s MAP Profile
Currently, there are no provisions enabling taxpayers to negotiate APAs with the tax authorities. Disputes are generally resolved between taxpayers and the tax authorities. If they fail to reach an agreement, the taxpayer has the right to turn to administrative court. Cross-border disputes may also be subject to MAPs. For further information, please refer to Estonia’s MAP Profile.
Simplifications
There are no simplification measures besides the one for low-value adding intra-group services dealt with in question 24.
Special Topics
Article 5 of the Transfer Pricing Regulation
Domestic Transfer Pricing Regulation follows the main principles of the TPG on intangibles. Among other things, the list of the comparability characteristics for intangibles covers expectation of future profit from the assets, stage of development and useful life of the assets, if the assets are accompanied by rights to enhancements and updates, as well as uniqueness and value of the assets.
Article 20 of the Transfer Pricing Regulation; HTVI Implementation Questionnaire
Domestic Transfer Pricing Regulation follows the main principles of the TPG on intangibles and, although there are no special measures regarding HTVI, the principles on the TPG are followed and adjustments based on the HTVI guidance can be made within the standard statute of limitation applicable for all transactions.
Article 6 of the Transfer Pricing Regulation
Domestic Transfer Pricing Regulation follows the main principles of the TPG on services.
Subsection 3 (8) and Article 18 of the Transfer Pricing Regulation
Transfer Pricing Regulation contains specific comparability characteristics for financial transactions as well as documentation requirements related thereto that should be in line with the TPG.
Full OECD Questionnaire
Legal ReferenceSubsection 50 (4) of the Income Tax Act
Legal ReferenceArticle 20 of the Transfer Pricing Regulation
The TPG have no legal status within the Estonian tax system. However, they have been translated into Estonian and, according to Article 20 of the Regulation no. 53 (Transfer Pricing Regulation) drafted by MoF (in force since 1.01.2007), taxpayers and tax administrations are encouraged to use the TPG for those situations not covered by the Transfer Pricing Regulation, as far as the guidance in the TPG is not in contradiction with it.
Legal ReferenceArticle 8 of the Income Tax Act
The definition of the related parties is contained in Article 8 of the Income Tax Act and, according to that, parties are deemed to be associated if they have common business interest or if one party has dominant influence over another. This article also includes an illustrative list of associated persons: (1) Persons are deemed to be associated if they have a common commercial interest or if one person has dominant influence over the other. The following persons are always deemed to be associated: 1) spouses, civil partners, direct or in-law relatives; 2) companies belonging to one group as defined in Article 6 of the Commercial Code; 3) a legal person and a natural person who owns more than 10% of the share capital, total number of votes or rights to the profits of the legal person; 4) a legal person and a person who owns, together with other associated persons, more than 50% of the share capital, total number of votes or rights to the profits of the legal person; 5) legal persons if more than 50% of their share capital, total number of votes or rights to the profits belongs to one and the same person or associated persons; 6) persons who own more than 25% of the share capital, total number of votes or rights to the profits of one and the same legal person; 7) legal persons whose management board members or bodies substituting the management board are the same persons; 8) an employer and an employee, the employee’s spouse, civil partner or direct blood relative; 9) a legal person and a member of its management board or controlling body (Article 9), the spouse, civil partner or a direct blood relative of a member of the management or controlling body. Transfer pricing rules apply to transactions of resident legal persons, non-resident persons operating in Estonia through a permanent establishment and transactions of sole proprietors with any related persons.
Legal ReferenceArticle 11 of the Transfer Pricing Regulation
If the circumstances related to the transaction do not allow for using the listed methods, another method may be used for determining the market value of the transfer price. Justifications must be given for such use of another method.
- CUP (provided)
- Resale Price (provided)
- Cost Plus (provided)
- TNMM (provided)
- Profit Split (provided)
- Other (provided)
Legal ReferenceSubsection 11 (2) of the Transfer Pricing Regulation
The method providing the most reliable result shall be selected on the basis of the specifics of the inspected transaction, the reliability of the available data about comparable transactions, the justification of the assumptions, and the level of similarity of comparable transactions.
- Hierarchy of methods (not selected)
- Most appropriate method (selected)
- Other (if so, please explain) (not selected)
Legal ReferenceSubsection 12 (4) of the Transfer Pricing Regulation
Domestic legislation recognizes the comparable uncontrolled price method as most reliable if there are comparable information available or small differences could be adjusted.
Legal ReferenceArticles 3 and 20 of the Transfer Pricing Regulation
Article 3 of the Transfer Pricing Regulation lays the foundation for comparability analysis. According to Article 20, it is recommended to follow the TPG.
Legal ReferenceSubsection 3 (3) of the Transfer Pricing Regulation
Upon comparing transactions, data of transactions between the taxpayer and a non-associated person shall generally be preferred to the data of transactions between a third party and a non-associated person, and data in Estonian databases shall be preferred to data in databases of foreign states.
Legal ReferenceSubsection 18 (4) of the Transfer Pricing Regulation
The comparable data necessary to determine the market value of the transfer price must be available to both the tax authorities and the taxpayer.
Legal ReferenceSubsections 11 (8) and 2 (6) of the Transfer Pricing Regulation
The transfer price shall be considered conformant to the market value if it is within the price range determined on the basis of the comparison data. If the transfer price is outside such price range, the tax administrator shall have the right to correct the transaction price in such a way that the result is within the price range. If the determined price range of market values is very wide, the analysis shall be repeated with more specific data or with other methods. Price range shall mean a series of results in interquartile range determined with the same method of determining the transfer price using different comparable data or with different methods of determining the transfer price.
Legal ReferenceSubsection 3 (4) of the Transfer Pricing Regulation
Comparability adjustments principles in the Transfer Pricing Regulation are applied based on the TPG.
Legal ReferenceArticle 5 of the Transfer Pricing Regulation
Domestic Transfer Pricing Regulation follows the main principles of the TPG on intangibles. Among other things, the list of the comparability characteristics for intangibles covers expectation of future profit from the assets, stage of development and useful life of the assets, if the assets are accompanied by rights to enhancements and updates, as well as uniqueness and value of the assets.
Legal ReferenceArticle 20 of the Transfer Pricing Regulation; HTVI Implementation Questionnaire
Domestic Transfer Pricing Regulation follows the main principles of the TPG on intangibles and, although there are no special measures regarding HTVI, the principles on the TPG are followed and adjustments based on the HTVI guidance can be made within the standard statute of limitation applicable for all transactions.
Legal ReferenceArticle 6 of the Transfer Pricing Regulation
Domestic Transfer Pricing Regulation follows the main principles of the TPG on services.
Legal ReferenceArticle 6 of the Transfer Pricing Regulation
Transfer Pricing Regulation contains a simplified approach (which is in line with Section D of Chapter VII of the TPG) for low value-added intra-group services.
Legal ReferenceSubsection 3 (8) and Article 18 of the Transfer Pricing Regulation
Transfer Pricing Regulation contains specific comparability characteristics for financial transactions as well as documentation requirements related thereto that should be in line with the TPG.
Legal ReferenceArticles 50^2, 54 (3), 54^2 of the Income Tax Act; Clause 48 (4) 6) of the Income Tax Act
Given the peculiarities of the Estonian income tax system (taxation of profits in its distribution), no limit on the deduction of interest can be imposed in Estonia. Instead, to prevent undermining the tax base and shifting profits through excessive interest payments, the residual borrowing costs, similar to other non-business costs, is taxed (exceptions apply). Loans granted to employees with an interest rate below the market conditions, except if the interest at the moment of the payment thereof is at least twice the interest rate last published pursuant to subsection 94 (2) of the Law of Obligations Act, are considered as fringe benefits and taxed accordingly. Loan granted to parent company or subsidiary of the same parent company could be regarded under certain circumstances as hidden profit distribution triggering 22% CIT. Additionally, granting, repayment and interest received of aforementioned loan should be declared.
Legal ReferenceArticle 17 of the Transfer Pricing Regulation
Legal ReferenceArticle 18 of the Transfer Pricing Regulation; Article 20^3 of the Tax Information Exchange Act
- Master file consistent with Annex I to Chapter V of the TPG (selected)
- Local file consistent with Annex II to Chapter V of the TPG (selected)
- Country-by-country report consistent with Annex III to Chapter V of the TPG (selected)
- Specific transfer pricing returns (separate or annexed to the tax return) (not selected)
- Other (specify) (not selected)
Legal ReferenceSubsection 50 (7) of the Income Tax Act; Subsection 18 (9) of the Transfer Pricing Regulation; Subsection 205 (1) of the Tax Information Exchange Act
The tax authority shall give the company a term of at least sixty days for submitting the transfer pricing documentation. The tax authority may request a translation of the documents into the Estonian language, if the documents have been prepared in a foreign language by assigning a reasonable timeline for submitting the translation. The country-by-county report should be submitted to the tax authority by 31 December of the calendar year following the financial year that is a reporting year.
Legal ReferenceArticles 153^1 and 154 of the Taxation Act; Subsection 44 (8) of the Penal Code
There are no special transfer pricing penalties. The law provides for penalties in case of concealment of tax liability and increase of claim for refund without basis. Failure to submit information to a tax authority intentionally or submission of false information if the tax or withholding obligation is decreased thereby or the claim for refund is increased is punishable by a fine of up to EUR 32 000 (Article 153^1 of the Taxation Act). In case of obstruction of activities of the tax authority (failure to submit a tax return, other document or thing by the due date, failure to register with a tax authority, failure to comply with the requirements for the keeping of records or failure to comply with an order of a tax authority) the fine is up to EUR 3 200 (Article 154 of the Taxation Act). Intentional submission of wrong information in tax return may also cause criminal proceedings where the fine is up to EUR 16 million (Article 44 of the Penal Code).
Legal ReferenceSubsection 18 (1) of the Transfer Pricing Regulation
Documenting the transfer prices shall follow the general requirements for documenting economic transactions. The additional requirements for documentation as provided for in Article 18 of the Transfer Pricing Regulation shall be applied only: 1) to a resident credit institution, insurance undertaking and business association registered in a securities market; 2) if one transaction party is a person situated in a non-cooperative jurisdiction for tax purposes; 3) to a resident business association having 250 or more employees including associated persons, or having together with associated persons a turnover of EUR 50 million or more in the financial year preceding the transaction, or having together with associated persons a balance sheet total of EUR 43 million or more; 4) to a non-resident being active in Estonia via a permanent establishment and having 250 or more employees including associated persons or having together with associated persons a turnover of EUR 50 million or more in the financial year preceding the transaction, or having a consolidated balance sheet total of EUR 43 million or more.
Legal ReferenceArticle 87 of the Administrative Procedure Act; Article 19 of the Transfer Pricing Regulation; Estonia’s MAP Profile
Currently, there are no provisions enabling taxpayers to negotiate APAs with the tax authorities. Disputes are generally resolved between taxpayers and the tax authorities. If they fail to reach an agreement, the taxpayer has the right to turn to administrative court. Cross-border disputes may also be subject to MAPs. For further information, please refer to Estonia’s MAP Profile.
- Rulings (not selected)
- Enhanced engagement or cooperative compliance programmes (not selected)
- Advance Pricing Agreements (APA) (not selected)
- Unilateral APAs (not selected)
- Bilateral APAs (not selected)
- Multilateral APAs (not selected)
- International Compliance Assurance Programme (ICAP) (not selected)
- Mutual Agreement Procedures (selected)
- Other (please specify) (not selected)
- In-scope tested parties resident within the jurisdiction can elect to apply the simplified and streamlined approach (i.e. safe harbour) (not selected)
- In-scope tested parties resident within the jurisdiction are required to follow the simplified and streamlined approach for in-scope qualified transactions and tax administrations are allowed to impose the application of the simplified and streamlined approach to in-scope qualified transactions of tested parties resident within their jurisdiction (i.e. rule) (not selected)
- N/A (selected)
- 20% (not selected)
- 30% (not selected)
- Other (please specify) (not selected)
- N/A (selected)
There are no simplification measures besides the one for low-value adding intra-group services dealt with in question 24.
Legal ReferenceArticle 20 of the Transfer Pricing Regulation
Legal ReferenceArticle 20 of the Transfer Pricing Regulation
Legal ReferenceArticles 19-20 of the Transfer Pricing Regulation
The guidance in the TPG is followed to make secondary adjustments.
Out of those 60 treaties, some treaties contain a combination of the UN Model Convention Article 7 and pre-2010 OECD Model Convention Article 7.
- Article 7 as it read before 2010. (selected)
- Article 7 as it reads after 2010. (selected)
- Other (please provide additional details) (selected)
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