The decision from the ministry could deprive tens of thousands of people of social guarantees

At first glance, a business account is a convenient way to conduct business along with your main job, since using it you do not have to deal with any bureaucracy, taxes are automatically deducted from the received invoices, there are no accounting costs, etc. However, before opening an account, you should know that when working through an entrepreneurial account, the tax burden is much higher, and there is also a risk of losing some social guarantees. Transactions amounting to about 4 million euros per month are made through the business account, and tax revenues received from business accounts last year amounted to about 7.7 million. Photo: IMAGO/Guido Schiefer/Scanpix

At first glance , a business account is a convenient way to conduct business along with your main job, since using it you do not have to deal with any bureaucracy, taxes are automatically deducted from the received invoices, there are no accounting costs, etc. However, before opening an account, you should know that when working through an entrepreneurial account, the tax burden is much higher, and there is also a risk of losing some social guarantees.

By creating the opportunity for an entrepreneurial account (ettevõtluskonto), the state wanted to solve the situation where thousands of people, in addition to their main business, are engaged in micro-businesses, providing services mainly to private individuals, but no one pays taxes on this. That is why the Ministry of Finance has developed a solution – an entrepreneur account, where everything happens automatically.

Currently, a business account can only be opened at LHV Pank, and the system itself is very simple. LHV Pank reports the details of the person who opened the business account to the Tax and Customs Board, and if money is received into the business account, LHV Pank immediately reserves tax on this amount. The current tax rate is twenty percent for business accounts with annual income of less than 25,000 euros, and forty percent for income between 25,000 and 40,000 euros. But the government has just approved changes to the business account, which from 2025 will allow a twenty percent tax rate to apply on annual income up to 40,000 euros.

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