Exchange of tax information

The Foreign Account Tax Compliance Act (FATCA) is a law passed in the United States in 2010 to increase state budget revenues and improve the efficiency of tax reporting. The purpose of FATCA is to collect information for the US on the income of tax residents, which is transferred to the accounts held by non-US financial institutions (including Estonian financial institutions). A punitive measure is used to ensure that information is obtained from such financial institutions - if a financial institution does not provide the requested information to the US, 30% of the payments made to that financial institution from US sources will be withheld. 

There are two ways to transfer financial account information to the US: 

• the financial institution enters into an agreement with the US and transmits the information directly to the US; 
• the country enters into an international agreement with the United States (FATCA agreement) and forwards the information to the United States on behalf of the financial institutions in its territory.  

Estonia has chosen to fulfill FATCA requirements through the FATCA agreement, similarly to other EU member states. The exchange of information under the FATCA agreement is reciprocal. This means that Estonia receives information from the US on the accounts of Estonian tax residents in the US financial institutions and vice versa. 

Agreement between the Government of the Republic of Estonia and the Government of the United States of America to Improve International Tax Compliance and to Implement FATCA was signed on April 11, 2014 and entered into force on June 30, 2014.  

Note: Article 7 of the FATCA Agreement provides for the application of the so-called most-favoured provision. On 30 June 2014, US concluded an agreement with the British Virgin Islands which, for the period from 1 July to 31 December 2014, is more favourable regarding company accounts than the FATCA Agreement (Annex I, Section VI, paragraph H). This more favourable provision has been taken into account in subsection 2 of § 13 of the Tax Information Exchange Act. 

USA- British Virgin Island FATCA Agreement.pdf | 260.81 KB | pdf 

The exchange of information on financial accounts for Estonia began in 2017 pursuant to the Multilateral Competent Authority Agreement signed in Berlin on 29 October 2014 at the OECD level. 

Under the agreement, countries obtain financial information from their financial institutions and automatically exchange it annually with other countries. Financial information is collected from reporting financial institutions, which report the relevant information collected on clients’ financial accounts to the Tax and Customs Board. 

At the OECD level, exchange of information on financial accounts is based on the Common Reporting Standard (CRS). This standard was applied by the Member States of the European Union through an amendment to the Directive on Administrative Cooperation adopted in 2014. 

Structurally, the main text of the Directive on Administrative Cooperation incorporates the text of the agreement between tax authorities, setting out the information to be collected and the procedures and deadlines for its exchange. The rules on reporting and due diligence measures are set out in Annex I to the Directive. Annex II to the Directive contains certain additional provisions on reporting and due diligence measures. 

Latest version of the CRS: Consolidated text of the Common Reporting Standard (2025) 

The Directive has been transposed into Estonian law by reference, in order to avoid creating the appearance of an additional exchange-of-information standard. When applying due diligence measures and fulfilling reporting obligations, it is therefore necessary to rely on the text of the Directive and its annexes and recommended to take guidance from the commentary to the OECD standard. 

The scope of application of the standard for the exchange of information on financial accounts has three dimensions: 

• information on financial accounts covers all types of investment income (including interest and dividend income, income from certain insurance contracts, etc.), as well as account balances and income derived from the sale of financial assets; 
• the reporting obligation applies not only to banks and custodial institutions, but also to other financial institutions, such as brokers, certain collective investment vehicles, and insurance companies; 
• reportable accounts include accounts held by individuals and entities (including trusts and foundations). 

With the 2023 amendment to the Directive on Administrative Cooperation (Council Directive (EU) 2023/2226), the scope of the exchange of information on financial accounts was extended as of 2026 to include e-money products and central bank digital currencies. In addition, reporting entities are required to apply enhanced due diligence measures when identifying clients. 

Tax ruling is a written position of the tax authority on how a specific transaction, structure, or arrangement is to be taxed. The exchange of information concerns advance rulings that may have any cross-border impact—for example, where a transaction partner or its place of activity is in another country. 

The exchange of information on advance rulings does not impose any additional obligations on individuals. 

At the OECD level, the exchange of information on advance rulings is based on the Base Erosion and Profit Shifting (BEPS) Action Plan, under which, among other things, it was agreed to exchange information on binding advance rulings issued by tax authorities. At the European Union level, the exchange of information is based on the 2015 amendment to the Directive on Administrative Cooperation in the field of taxation. 

Across the European Union, the competent authorities of the Member States submit binding advance rulings to a central database. Access to the data in the database is limited to the competent authorities of the Member States and, to a limited extent, to the European Commission for supervisory purposes. 

At the OECD level, there is no central database, and binding advance rulings are sent directly to the relevant jurisdictions. 

With the 2023 amendment to the Directive on Administrative Cooperation, as of 2026 the exchange of information will also cover advance rulings with cross-border effects that concern the tax liability of an individual, where the total amount of the underlying transactions exceeds EUR 1.5 million or where the ruling determines a person’s tax residence. 

Similarly to the exchange of information on advance rulings, another instrument for information exchange under BEPS is the Country-by-Country (CbC) reporting for large multinational groups. To facilitate the exchange of information on Country-by-Country reporting, a Multilateral Competent Authority Agreement was signed at the OECD level on 27 January 2016. European Union Member States implement the annual exchange of information through the 2016 amendment to the Directive on Administrative Cooperation. Countries began exchanging information for the first time at the end of 2017 / beginning of 2018, covering the 2016 financial data of large multinational groups. 

Annual reporting covers basic information recorded in the financial statements of large multinational groups operating in Estonia, whose annual revenue exceeds EUR 750 million, including data on income tax obligations, profit, share or equity capital, tangible assets, (subsidiary) business activities, and employees. If there are issues with the implementation of reporting in the parent company’s jurisdiction, the reporting obligation falls on the subsidiaries. The tax authority forwards the report to the countries in which the group operates. 

The information exchange model is implemented through the Tax Information Exchange Act, based on the corresponding EU regulation. 

Work is underway to improve the OECD Country-by-Country reporting model. 

Country-by-Country tax reporting also covers Public Country-by-Country Reporting based on the Accounting Directive, which in Estonia is implemented through the Tax Information Exchange Act. This does not impose any additional obligations on businesses. The Directive can be accessed here. 

Since 2021, tax authorities have implemented the exchange of information on cross-border arrangements, stemming from the 2018 amendment to the Directive on Administrative Cooperation. Cross-border arrangements subject to reporting are those that enable aggressive tax planning, allow circumvention of the exchange of information on financial accounts, or conceal the beneficial owners of assets. 

Obliged entities are EU residents who provide any tax advisory service in the course of a business relationship. These may also include financial institutions. In exceptional cases, the taxpayer using the relevant arrangement may be obligated to act as the reporting entity. The exchange of information concerns cross-border arrangements implemented after 25 July 2018. 

In the summer of 2020, OECD member countries reached an agreement on the reporting model for digital platforms. The OECD model provides for the collection and exchange of information on cross-border services offered through a digital platform, including transportation and accommodation services. Under this model, digital platforms that connect service providers and buyers are also subject to reporting obligations. 

The OECD model largely served as a basis for the 2021 amendment to the EU Directive on Administrative Cooperation, which requires EU Member States, to impose a reporting obligation on platform operators. Under this obligation, platform operators must annually provide information on individuals operating on their platform and the income earned by them. 

Platform operators are natural or legal persons who enable different sellers and service providers to register on a platform through which legally binding contracts can be concluded with other users for the sale of goods or the provision of services. 

Tax authorities exchange this information annually, within two months after the end of the calendar year to which the platform operator’s reporting relates. 

The regulation on the exchange of information on crypto-assets is based on the CARF (Crypto-Asset Reporting Framework) model agreed upon by OECD member countries. 

Estonia signed the OECD Multilateral Competent Authority Agreement on the exchange of crypto-asset information in 2024. With the transposition of the 2023 amendment to the Directive on Administrative Cooperation (Directive 2023/2226), Estonia is introducing a reporting obligation for crypto-asset service providers. 

Due diligence measures and reporting obligations concerning crypto-assets and crypto-asset users are structured similarly to financial account reporting and should be fulfilled according to Annex VI of the Directive on Administrative Cooperation. 

To comply with this obligation, crypto-asset service providers must collect data on both Estonian and foreign residents starting from 2026. The data collected includes the tax residence of crypto-asset users and information on their transactions involving crypto-assets. Service providers submit a declaration containing the collected data to the Tax and Customs Board once a year. 

The exchange of information between partner countries takes place annually. 

With the 2025 amendment to the Directive on Administrative Cooperation, an agreement was reached on reporting related to the minimum tax. Estonia is not required to apply the Minimum Tax Directive, which forms the basis of this reporting, until 31 December 2029. As long as Estonia applies the exemption provided by the Minimum Tax Directive and does not implement a minimum tax, it is also not required to exchange information related to the minimum tax.