Finance Ministry proposes zero-bureaucracy individual enterprise account
The Ministry of Finance is planning to create a so-called enterprise account to support the development of small businesses. The enterprise account disposes of bureaucratic obstacles and taxes the revenue of those using it at a lower rate.
Minister of Finance Sven Sester (IRL) said in paper Postimees on Wednesday that the plan was to create the opportunity for individual enterprises (i.e. natural persons) to offer their services to other natural persons and products to companies in such a way that no accounting was necessary.
To this end, the ministry will create the so-called enterprise account in cooperation with the local banks. When the account holder gets paid, the money, going through the enterprise account, is split up, with tax payments going directly to the Tax and Customs Board, and the individual enterprise receiving the remainder of the money.
Not only would such a scheme help individual enterprises save money in terms of the cost of their business, Sester said, but the percentage of the combination of insurance, pension, and social tax payments could be reduced. Sester proposed 20% as a first figure.
This would mean zero bureaucracy for the individual entrepreneur, Sester said, at the same time pointing out that such a model of course wouldn’t allow the subtraction of other business costs.
The system could become effective on Jan. 1, 2018. According to current plans, such business activity would be limited to a total annual turnover of €25,000 or less.