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  • Taxation

    • Can I deduct capital losses from revenues?


    Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.


    In Estonia the short answer: no

    Explanation by the Tax and Customs Board: income tax liability can be postponed by investing in financial assets (e.g. exchange-traded shares, fund units, etc.) openly traded in EEA states or OECD member countries by using an investment account system. An investment account system does not extend to loan-based activities (e.g. through Crowdestate).

    Interest or interest on arrears on a loan are subject to income tax on a gross basis and tax liability for interest income from a loan relationship cannot be postponed through an investment account (reinvesting is not tax-exempt.

    Untaxed interest or interest on arrears must be declared in the income tax return and income tax must be paid on the basis of the income tax return. If income tax has been immediately withheld by a bank in Estonia, it will be reflected in your pre-filled tax return.



    How is my investment income taxed?


    Crowdestate’s funding model is usually structured in the form of a loan from a member of the platform to a Legal Entity. With this financing model, the Legal Entity will return the principal amount given to them as a loan, and Crowdestate users will have the possibility to earn interest revenue from the loan. 

    Currently, Crowdestate does not deduct any taxes from Estonian investment opportunities for foreign investors.

    If you are Estonian tax resident then the principal payments are not taxable according to applicable Estonian regulations. However, in the case of private persons, interest payments can be considered as income revenue, which can be taxable according to local laws. 

    For Estonian private persons, we have made the taxation process as comfortable as possible, and we deduct the income tax automatically from interest payments. Information about earned interest and the taxation will be relayed to the Estonian Tax and Customs Board. 

    NB! Taxation is based on the name and ID code of the person who is listed as the owner of the investment account through which the investment(s) are made.

    In other investment opportunities, the tax is being withheld from the interest paid out. Read more about it here: https://blog.crowdestate.eu/en/interest-income-and-withholding-tax/

    If the withholding income tax rate is lower than the investor’s domestic income tax rate, the investor would need to declare the non-taxed part of the income and, if necessary, pay additional income tax.

    As taxation is dependent on each individual investor’s tax residency, we advise you to check the local regulations or consult your tax advisor before declaring (or not declaring) income from Crowdestate’s investment opportunities.



    Income tax return


    Estonian investment opportunities: No tax is being held on your account. Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

    Other investment opportunities: Tax is being withheld from the interest paid out. 

    Read more about it here: https://blog.crowdestate.eu/en/2020/withholding-tax-and-interest-rates/

    If the withholding income tax rate is lower than the investor’s domestic income tax rate, the investor would need to declare the non-taxed part of the income and, if necessary, pay additional income tax.

    You will find the materials necessary for the income tax return by clicking on ‘Overview’ – ‘Reports’. There you can draw up an interest statement as well as a balance statement.

    Investors with Estonian tax residency:

    Estonian investment opportunities: Only private accounts are subject to income tax.

    Other investment opportunities: Same as above.


    Refund of income tax


    Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

    In Estonia: The refunding of income tax depends on the income tax return for a natural person. If the annual taxable income is less than 6000 euros, the overpaid amount of income tax is returned.

    Taxes are calculated in chronological order on all investment accounts and not on each account separately. See table 6.5 for payments to or from your accounts.



    Tax residency document example


    Here is an example of Estonian tax residency document and an Italian tax residency document, to get a better understanding of what it should look like. You can get this document from your country's tax office.


    When filling out income tax returns, in which row should I declare the income from buying and selling shares through Crowdestate?


    Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

    In Estonia: Income from the sale and purchase of Crowdestate shares is declared in row 5.6 – Other taxable income not listed above on which income tax has not been withheld.


    Where can I get the tax residency certificate?


    Please contact your country’s tax office to provide you with the needed document.


    Where in the income tax return can I see income declared by Crowdestate?


    Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

    Crowdestate does not declare income – Sponsors of projects do.

    In Estonia: The relevant data is available at 5.1 – Salary and other remuneration.

    In the case of foreign projects, you must declare income yourself.



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Taxation

Can I Deduct Capital Losses From Revenues?


Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.


In Estonia the short answer: no

Explanation by the Tax and Customs Board: income tax liability can be postponed by investing in financial assets (e.g. exchange-traded shares, fund units, etc.) openly traded in EEA states or OECD member countries by using an investment account system. An investment account system does not extend to loan-based activities (e.g. through Crowdestate).

Interest or interest on arrears on a loan are subject to income tax on a gross basis and tax liability for interest income from a loan relationship cannot be postponed through an investment account (reinvesting is not tax-exempt.

Untaxed interest or interest on arrears must be declared in the income tax return and income tax must be paid on the basis of the income tax return. If income tax has been immediately withheld by a bank in Estonia, it will be reflected in your pre-filled tax return.



How Is My Investment Income Taxed?


Crowdestate’s funding model is usually structured in the form of a loan from a member of the platform to a Legal Entity. With this financing model, the Legal Entity will return the principal amount given to them as a loan, and Crowdestate users will have the possibility to earn interest revenue from the loan. 

Currently, Crowdestate does not deduct any taxes from Estonian investment opportunities for foreign investors.

If you are Estonian tax resident then the principal payments are not taxable according to applicable Estonian regulations. However, in the case of private persons, interest payments can be considered as income revenue, which can be taxable according to local laws. 

For Estonian private persons, we have made the taxation process as comfortable as possible, and we deduct the income tax automatically from interest payments. Information about earned interest and the taxation will be relayed to the Estonian Tax and Customs Board. 

NB! Taxation is based on the name and ID code of the person who is listed as the owner of the investment account through which the investment(s) are made.

In other investment opportunities, the tax is being withheld from the interest paid out. Read more about it here: https://blog.crowdestate.eu/en/interest-income-and-withholding-tax/

If the withholding income tax rate is lower than the investor’s domestic income tax rate, the investor would need to declare the non-taxed part of the income and, if necessary, pay additional income tax.

As taxation is dependent on each individual investor’s tax residency, we advise you to check the local regulations or consult your tax advisor before declaring (or not declaring) income from Crowdestate’s investment opportunities.



Income Tax Return


Estonian investment opportunities: No tax is being held on your account. Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

Other investment opportunities: Tax is being withheld from the interest paid out. 

Read more about it here: https://blog.crowdestate.eu/en/2020/withholding-tax-and-interest-rates/

If the withholding income tax rate is lower than the investor’s domestic income tax rate, the investor would need to declare the non-taxed part of the income and, if necessary, pay additional income tax.

You will find the materials necessary for the income tax return by clicking on ‘Overview’ – ‘Reports’. There you can draw up an interest statement as well as a balance statement.

Investors with Estonian tax residency:

Estonian investment opportunities: Only private accounts are subject to income tax.

Other investment opportunities: Same as above.


Refund Of Income Tax


Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

In Estonia: The refunding of income tax depends on the income tax return for a natural person. If the annual taxable income is less than 6000 euros, the overpaid amount of income tax is returned.

Taxes are calculated in chronological order on all investment accounts and not on each account separately. See table 6.5 for payments to or from your accounts.



Tax Residency Document Example


Here is an example of Estonian tax residency document and an Italian tax residency document, to get a better understanding of what it should look like. You can get this document from your country's tax office.


When Filling Out Income Tax Returns, In Which Row Should I Declare The Income From Buying And Selling Shares Through Crowdestate?


Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

In Estonia: Income from the sale and purchase of Crowdestate shares is declared in row 5.6 – Other taxable income not listed above on which income tax has not been withheld.


Where Can I Get The Tax Residency Certificate?


Please contact your country’s tax office to provide you with the needed document.


Where In The Income Tax Return Can I See Income Declared By Crowdestate?


Please do your taxes according to your country's tax regulations. In case you are unaware of the requirements, we advise consulting your country's tax advisor.

Crowdestate does not declare income – Sponsors of projects do.

In Estonia: The relevant data is available at 5.1 – Salary and other remuneration.

In the case of foreign projects, you must declare income yourself.