Investeerimiskonto is essentially an account opened with an investment firm, to which you can deposit cash for investing in securities such as stocks, bonds, ETFs and money market funds.

With investment accounts, individual transactions won’t be taxed. Tax liability will arise from the total income earned from investments. The investment account system aims to make taxation of investment income fair and considerate of factual financial situations. It allows investors to deduct investment-related costs and investment losses from any profit made on transactions within the investment account.

Simply put, the investment account allows you to defer income tax until investment income is taken into regular consumption. Tax will only need to be paid on the amount of withdrawals that exceed the amounts you’ve paid into the investment account.

Until that point, investments can be bought and sold without an intermediate tax liability. If you don’t withdraw earnings - like profits from sales or dividends that exceed any occurred losses - out of your investment account (that is, out of Lightyear), you’re free to reinvest them without immediate tax liability.

It’s important to remember that the investment account allows for tax deferring, but does not clear you of tax liability.

With Lightyear, you only need to have one account. No need for two: a securities and an investment account, as you’re used to with local banks. Your Lightyear account operates as a combination of both and can be reported to the Estonian Tax Authority (EMTA) with the account reference number that you find on your account statements.

If you’re already a Lightyear user, you’ll see ‘Use as an investment account’ in the main menu, under your personal Lightyear account. From there, you can start using your existing account as an investment account. If you’re creating a new account, we’ll ask you whether you want to use Lightyear as an investment account as you sign up.