Which costs am I allowed to claim as business expenses?
Estonian companies can deduct all costs from purchases directly related to the company’s actual business operations, such as:
Expenses covered by your customers
Fees of subcontractors
Professional and support services
Hardware and software
Participation in business-related events
Business-related professional training
Bank and transaction fees
Office costs and supplies (restrictions apply)
Business lunches & gifts (taxable)
Relevant taxes (salary taxes, dividend taxes, fringe benefits etc.)
If you’re uncertain whether an expense qualifies as a business expense, make sure to ask us email@example.com beforehand.
Which costs am I not allowed to claim as business expenses?
Purchase of food and drinks for personal use
Purchase of furniture for your office
Purchase of clothes
Purchase of fuel for your personal car for everyday use
Business lunches (technically, you can add them as business expenses, but fringe benefit tax applies - approximately 70%).
Rent of your house or apartment
Buying, renting or maintaining a property (office etc) in a different country
Costs of holidays
Costs of your family/friends
Costs of personal health care, insurance etc
Withdrawal of cash for personal use
Vehicles registered in a different country
Per diems (daily allowances) to you and your staff when stationed in a different country
If you’re in doubt, please contact us beforehand at firstname.lastname@example.org.
Can I buy goods and services in foreign countries?
You can buy goods (hardware) and services as business expenses under your company name in different countries (even if they are not delivered to Estonia or physically present here) as long as these costs are business related.
When and how do I need to provide my expense documents?
Please collect and submit documents relevant to your company's expenses whenever they occur, or at least once per month. Even if there is only a single document to submit. This way we can process them in a timely manner, monitor your company's status, and execute the monthly reporting for the public authorities.
All you need to do is upload/send PDF copies of expense and cost documents, and we'll take care of the rest.
Can I rent an office for a longer time period?
We wouldn't recommend it. While you are allowed to rent some office space abroad by Estonian law, it's better to rent only on a short-term basis (6 months maximum).
If an Estonian company rents office space in a country longer term, the local authorities in that country could claim the Estonian company has permanent residence and should start filing reports and following local compliance rules. However, if you claim there are no business operations and it's an empty space, Estonian tax authorities might claim the cost isn't justified from a business perspective and decide to tax it.
Why can't I sell physical goods with LeapIN?
The main reasons why we don't support selling physical goods are:
LeapIN does not have sufficient knowledge of the field, as it is a much more complex area with several regulations and laws
It has a more complex EU VAT system
It requires additional features, such as inventory
We are working on including support for product sales in future, but it won't be achieved within this year.
Can I operate freely with company money (e.g. on year-to-year declaration basis)?
No, you cannot operate freely with the money belonging to your business (e.g. use this for personal use). You need to keep your business' money and your own personal money separated.
LeapIN will execute monthly reporting and your business bank accounts must match business documentation (e.g. sales and purchase invoices), which you can administer easily with LeapIN.
Please note that LeapIN does not accept cash transactions (e.g. taking cash out of ATM with your bank card).
Is there a limit for the travel expenses that can be deducted?
There are no limitations on the total cost of travel expenses related to business trips, as long as your company has sufficient funds to afford them.
There are however limitations on daily allowance payments, the cost compensation which the company can pay to the board member/employee during business trips to cover everyday costs (normally mostly food costs). The rates are €50 per day for the first 15 days in a calendar month, and €32 per day for the rest of the period.
Can I hire a freelancer or subcontractor for my Estonian company?
Yes, an Estonian company (OÜ) is able to hire freelancers or subcontractors across the globe.
There are two ways of paying freelancers or suppliers:
The subcontractors or freelancers issue an invoice to the OÜ (as a customer) for their services, OR
If the freelancer is a non-incorporated individual and cannot issue a proper invoice, a simple written agreement between OÜ and the freelancer is sufficient evidence to match the payment for provided services. Of course, timesheets would be a bonus here.
If the work for these services is performed outside Estonia, no income taxes are paid by the Estonian company in these cases and the freelancers and/or subcontractors do not need a LeapIN membership in order to get paid. In this case, the freelancer or subcontractor is responsible for paying income taxes in the country where they are a tax resident.
Can I employ foreign nationals with tax residence outside Estonia on my payroll?
No. The most convenient option for your business would be subcontracting the necessary freelancer resources. You can use our 'App developer' and 'Professional' plans for (sub)contracting or using freelancer resources for your business.
What are the limits for invoice items per month?
There are no item or amount based limits. We expect 'normal use' related to your expected business plans. If we mutually recognise abnormal usage of the service then we can negotiate on the terms. Otherwise – there'll be no extra charges from LeapIN.
Can I forward you invoices in a foreign language (e.g. not English)?
We prefer if you create your invoices through your LeapIN dashboard, but if for some reason you need to create an invoice in another language, you can do so. Please be sure to upload both invoices into your dashboard, as we need them for accounting purposes.
We can accept purchase invoices/receipts in a foreign language (not English). However, we’ll ask you to include an explanation in English about the nature of the business expense, together with the invoice or receipt.