Training expenses reducing the taxable income
- Name of the instrument - Local language
- Koolituskulude võrra maksustatava tulu vähendamine
- Name of the instrument - English translation
- Training expenses reducing the taxable income
- Scheme ID
- 67
- Country
- Estonia
- Reporting year
- 2015
- Type of instrument
- Tax incentive for individuals
- Type of entry
- Single instrument
- Short description
Adults can deduct costs related to their education and training from their taxable income. They may also deduct the costs of education and training of their relatives living in the same household (fees for kindergarten, tuition fees for higher education of children in particular). The State co-funding – in the form of foregone tax revenues - equals to eligible costs multiplied by the marginal tax rate (flat rate of 20% in 2015).
The maximum amount that can be deducted is EUR 1 920 (2014).- Short description of the related instruments
nap
- Level of operation
- National
- Name of a part of the country
- nap
- Name of the region (for regional instruments)
- nap
- Name of the sector (for sectoral instruments)
- nap
- Relevance
- Key scheme
- Legal basis
Income Tax Act (§26)
- Objective(s) and target(s)
To maintain simple and uniform tax environment, enhance participation in lifelong learning. By adding a clause regarding tax reductions from kindergarten and non-public childcare facilities and service (e.g. NGOs) costs, families are treated more equally independent of childcare provider (latter cost more). Thus, same tax reduction conditions apply as for other education and training costs, which should motivate parents to combine work and family life and enhance adult learning.
- Year of implementation
- 1995
- Year of latest amendment
- 2015
- Operation/management
Ministry of Financial Affairs
Government issues Income Tax Act. Estonian Tax and Customs Board collects and monitors declarations of tax income.
- Eligible group(s)
All individuals who have income and who have paid for their own education and training or for education and training of close relatives (parents can also deduct expenses on kindergarten).
- Group(s) with preferential treatment
None
- Education and training eligible
General and specific; any kind of certified training - formal education, non-formal education both job related and hobby courses, life skills courses.
- Source of financing and collection mechanism
State (loss of tax revenue)
individual- Financing formula and allocation mechanisms
Deduction up to EUR 1 920 (from income earned before 1 January 2012: EUR 3 196), but no more than 50% of yearly taxable income.
- Eligible costs
Fees and other costs related to education and training (e.g. learning materials, interests on state-guaranteed study loans, kindergarten costs).
- Frequency of the use
Each year
- Volumes of funding
In 2013, EUR 84 700 000 (4,1% of total annual deductions) was referred to education and training; in 2012, EUR 84 400 000 (4% of total annual deductions); in 2011, EUR 80 600 000 (3,9% of total annual deductions). The proportion of the deduction related to adult learning (and not for initial education for children/dependent household members) is unknown.
- Beneficiaries/take up
No data is available on the acutal deductions of training costs. In 2013, 147 642 tax declarations were made.
- Organisation responsible for monitoring/evaluation
Ministry of Financial Affairs as it is part of state budgeting (but monitoring/evaluation of the tax incentive instrument gets little attention).
- Monitoring/evaluation reports available
n.a. but Estonian Tax and Customs Board reports a summary based on natural person's declarations of income and among others indicates total sum deduced for training/study expenses.
- Most relevant webpage - in English
https://www.riigiteataja.ee/en/eli/ee/Riigikogu/act/520012015019/consol…
- Most relevant webpage - local language
- Recent changes
Since 1 January 2012, upper limit of deductions from taxable income reduced from 3 196 EUR to 1 920 EUR. Deductions can be training costs, interests of loan for permanent living place and donations. The reason for this amendment in regulation is presumably the wish to reduce the deduction of loan interest, not training costs; people spent less on education and training than before. Reduced funding from individuals and education/training institutions was compensated by increased funding from public sources, mostly with assistance from the ESF.
Since 2015, income tax is lowered from 21% to 20%.- Sources
Consolidated texts of English translations of Estonian legislation; https://www.riigiteataja.ee/en/
Estonian Tax and Customs Board; http://www.emta.ee/?lang=en
- Short description
- Short description of the related instruments
- Level of operation
- Name of a part of the country
- Name of the region (for regional instruments)
- Name of the sector (for sectoral instruments)
- Relevance
- Legal basis
- Objective(s) and target(s)
- Year of implementation
- Year of latest amendment
- Operation/management
- Eligible group(s)
- Group(s) with preferential treatment
- Education and training eligible
- Source of financing and collection mechanism
- Financing formula and allocation mechanisms
- Eligible costs
- Frequency of the use
- Volumes of funding
- Beneficiaries/take up
- Organisation responsible for monitoring/evaluation
- Monitoring/evaluation reports available
- Most relevant webpage - in English
- Most relevant webpage - local language
- Recent changes
- Sources