Estonian Company’s Business Expenses

Expenses made for improving the employee’s health will not be taxed as a fringe benefit to the extent of 100 euros per employee per quarter if the employer has made this option available to all employees.

An employer can compensate up to 100 euros per employee per quarter for health and sports expenses exempt from tax.

It should be borne in mind that:

• the amount of 100 euros includes VAT and input value-added tax cannot be deducted on health and sports expenses incurred by the employee
• 100 euros may be used within one day, one month or three months. The important thing is that the total sum of the tax-exempt expenses for one quarter is up to 100 euros.
• 100 euros are per employee per quarter and cannot be transferred to other employees or to subsequent months or quarters, or to sum up of tax-exempt costs for the whole year is not allowed
• if an employee has several employers, each employer may apply a tax incentive in the amount of 100 euros for health and sports expenses
• an expense document is required to compensate the cost (exempt from taxes)
• it is necessary to keep person-based accounting (it is possible to select between cash-based or accrual accounting)
• there is no obligation to compensate the sports and health expenses, it is an opportunity to an employer
• the employee receives the benefit due to their employment relationship (contract will be signed in the future, is suspended, valid or terminated)
• the tax incentive does not cover equipment (clothing, footwear, a table tennis racket, skis, including rental of sports equipment and facilities, and so on) or extra services (for example, catering, transport, parking, luggage storage, banquet after the event and so on) necessary for the activity
• the tax incentive also extends to health and sports expenses incurred outside of Estonia

Sources:

Estonian Tax and Customs board
https://www.riigiteataja.ee/en/eli/530012014003/
https://www.riigiteataja.ee/en/eli/527022014003/
Business guide for e-Residents