Entrepreneur Account already has over 5000 users

29.07.2021

In two and a half years, the Entrepreneur Account, launched by LHV Pank and the Estonian Tax and Customs Board, has already gained more than 5000 users. The Entrepreneur Account simplifies the payment of taxes and reporting of private persons engaged in entrepreneurship.

With more than 1500 clients having already signed up for an Entrepreneur Account this year, it is clear that many have found the impetus to start a small business during the constraints of the pandemic. Using an Entrepreneur Account is the easiest and most favourable way to pay taxes correctly in employment relationships between individuals: no need to worry about registering employment, accounting statements, monthly tax returns or paying taxes.

When using an Entrepreneur Account, the tax rate is 20% of the amount credited to the account. If a person’s annual income exceeds EUR 25,000, the excess is taxed at 40%. The Entrepreneur Account cannot be used if the income received in the Entrepreneur Account exceeds EUR 40,000 per calendar year.

This year, Entrepreneur Accounts have received nearly EUR 4.4 million, on which EUR 890,000 in taxes have been paid. Since the establishment of the Entrepreneur Account at the beginning of 2019, a total of EUR 10.7 million has been received in the accounts and EUR 2.2 million has been paid in taxes.

Entrepreneur Accounts are used extensively by people performing menial jobs, such as lawnmowers or domestic help, but also by service providers, such as private teachers or nannies. These are areas where the tools are available or there are no high input costs. For example, if the agreed remuneration is EUR 100 and the private client transfers the remuneration to the worker’s Entrepreneur Account, nothing more needs to be done, as no tax returns need to be filed by either party. LHV Pank will reserve 20% of the EUR 100 received to cover the taxes and transfer it to the Estonian Tax and Customs Board. The EUR 20 received will be split by the tax authority between income tax, social tax, and funded pension contributions, and the person will be able to see the entire calculation of the Entrepreneur Account in e-MTA. In this case, EUR 80 will remain as the worker’s income. Although an Entrepreneur Account can also be used for occasional work, it should be noted that the holder of an Entrepreneur Account cannot be registered as unemployed at the same time.

To open an Entrepreneur Account you must be a client of LHV Pank: you can sign a client agreement and open an Entrepreneur Account electronically in LHV’s Internet Bank. Read more about the Entrepreneur Account at lhv.ee/et/ettevotluskonto.

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