The lending of international businesses operating in Estonia to parent and sister companies abroad during the second quarter of 2019 increased both on year as well as on quarter.
Altogether 147 companies gave loans in the total sum of €147.9 million to companies abroad in the second quarter of 2019. Of the money lent out of Estonia previously, €50.8 million moved back to 68 enterprises in Estonia in the second quarter of the year, the Tax and Customs Board (MTA) told BNS.
In the second quarter, lending from Estonia was up by €40 million on year. Altogether 138 companies provided loans in the total amount of €77 million to companies abroad in the first quarter of 2019.
Trends in lending and repayment vary by quarter, however, and thus it would not be useful to draw fundamental conclusions based on quarterly data alone, the MTA noted. All in all, last year, more loan money returned to Estonia than went out.
Approximately 5 percent of entrepreneurs obligated to submit a declaration failed to do so for the second quarter.
In accordance with amendments to the Income Tax Act and related laws passed by the Riigikogu in June 2017, the MTA can tax loans provided to shareholders, unit holders or members with income tax if the circumstances of the transaction hint that, by its nature, the transaction is about profit distribution.
If the repayment term of a loan issued to a parent or sister company is more than 48 months long, the taxpayer, at the demand of the tax administration, will be subject to the responsibility of proving that they are able and intend to repay the loan. The provision of the Income Tax Act regarding intragroup loans entered into force on Jan. 1, 2018.
Editor: Aili Vahtla