Baltic States: platform app tax evasion is less prevalent in Estonia than in Lithuania

While Lithuania has reported a rise in tax evasion by foreign nationals using platform apps to make a living, the issue is not, authorities say, as major in Estonia, thanks in part to a tightening of regulation.
Estonia’s efforts to address tax evasion by platform workers are ongoing, but undeclared wages still result in EUR 100 million annual losses, though mostly not relating to ride-hailing services, authorities say.
Whereas self-employed foreign nationals using platforms such as Wolt and Bolt in Lithuania often either evade taxes or leave debts behind when leaving the country, public broadcaster LRT reports, the situation in Estonia may be somewhat rosier.
The Estonian Tax and Customs Board (MTA) does not differentiate between citizens and foreigners among workers, self-employed individuals, or business account users, and does not retain data on workers’ nationalities in its registry.
As a result, they cannot determine whether the number of foreign tax debtors is increasing – though in any case stricter guidelines, platform data, and international recovery efforts mitigate the matter, such as it is.
Madis Laas, head of the MTA’s income tax department, told ERR that an updated guide for declaring income earned on platforms had transformed the situation with regard to platform workers.
He said: “To a degree, this issue was more widespread a few years ago, but in 2023, we updated the guidelines for taxing income earned on platforms.”
Clearer instructions requiring workers to operate as self-employed individuals, via private limited companies, or via a business account had significantly improved the situation, Laas added. “We no longer see such a major problem in this area today.”
While Wolt, Bolt and Airbnb are among the most well-known platform firms used in Estonia, the MTA has obtained data from a total of 169 such firms, of which 20 are Estonian companies, where at least one party to a transaction is an Estonian national or legal entity.
Revenues of EUR 505 million were reported via these platforms for 2023; nearly two-thirds of this, 62%, derived from the sale of goods, 31% from the sale of services and 7% from property rentals.
Based on this data, approximately 24,000 private individuals are beneficiaries, including both legally-defined natural persons and sole proprietors. Their transactions totaled EUR 70.2 million, meaning the bulk of the income went to the platform companies themselves.
Laas explained that starting from 2024, platforms also had to provide information about income earned via their setup.
“This will clearly simplify our work in identifying those who have not properly declared their income,” he said.
Additionally, where necessary, international cooperation will be deployed to recover debts from tax absconders.
“If we are dealing with malicious actors, we can use international mutual assistance to collect tax debts from other member states,” Laas added.
Despite these improvements, the MTA estimates the annual loss from undeclared wages to be EUR 100 million, though mostly not from ride-hailing platforms, among the most visible of such services.
Laas said that the greatest losses occurred in the accommodation, catering and construction sectors.
“This reflects that ride-sharing is not the biggest issue in terms of undeclared wages,” he noted. (ERR)