Investeerimiskontothe way it should be

Investeerimiskonto is an account opened with an investment firm, to which you can deposit cash for investing. The investment account allows you to defer your income tax liability for any investments bought and sold with the money deposited in an investment account.

This means you can buy and sell investments, receive dividend income, and reinvest the gains tax efficiently.

You will need to declare the investment account activity in the following tax year, but can effectively defer income tax payment until you’ve withdrawn more money from your investment account than you have put in.

While it’s entirely optional, the investment account comes with tax benefits when investing as a private person. You’ll be able to defer paying income tax, meaning you can reinvest sale profits, interest and dividends, without paying tax on each profitable transaction.

Loss from the sale of investments can be deducted from the income from the sale of other investments. If there’s no income in a specific tax year, the deduction of loss is carried on.

You’ll also get more out of interest on uninvested cash — for investment accounts, we won’t withhold tax from monthly payments. Meaning, every month we pay out the full interest you receive on cash, and you can reinvest the whole amount.

With the investment account system, a private person has the possibility to defer income tax liability on income from investments until that income is used for other purposes. If a payment is made out of an investment account, tax is charged on the amount by which the withdrawals from an investment account exceed the amounts deposited to the investment account.

You’ll need to declare activity from your Lightyear investment account every year, but will not have income tax liability until the time you take more money out from the investment account that you have put in.

Yes! The number of investment accounts you can have is not limited – you can open one with every bank or investment firm that offers it.

If you have an investment account in a bank, you can deposit money from there into your Lightyear investment account without this bringing about tax liability. That’s because transfers between different investment accounts keep the money within the investment account system.

The law takes effect retroactively, meaning from 1.01.2024 and hence you can declare all this year’s activities in the investment account system.

Also, If you have a Lightyear account before 2024, then the amended law states that:

• An account opened with an investment firm before January 1, 2024 can be declared as an investment account in the personal income tax return submitted for 2024.
• In order to postpone the income tax liability arising from the profit or income from the investments acquired through such an account before the specified date, the acquisition cost of the financial asset is declared as a 2024 contribution to the investment account. This means that all investments in your Lightyear account as of 1.01.2024 can be declared as contribution to the investment account.
• Such an investment is then considered a financial asset acquired with the money in the investment account.

Declaring taxes on your investment account only takes a few clicks. We’ll pre-fill all your investment activity data, which you can automatically forward to the Estonian Tax and Customs Board (EMTA) system in a draft format. From there, all you need to do is double-check the information submitted — and you’re done!

The balance of your investment account is calculated after each contribution to the investment account and each outpayment from it. The taxable amount arises if the outpayments made from the investment account exceeds the balance of the contribution.

In general, you only need to declare to EMTA:

• the money transferred to the investment account and
• the money outpayments from the investment account.

No purchase or sale of investments, nor money transfers between different investment accounts need to be declared.

Absolutely! Click here to read more about transferring over your investments from other service providers.

If these investments have been acquired inside the investment account system and transferred to Lightyear investment account, then they’ll remain within the investment account system.

If you have acquired investments with another provider outside the investment account regime however, then you can still transfer these over to Lightyear, but those can not be included in the investment account system (unless transferred before 1.01.2024) and hence will be taxed upon selling, i.e. pursuant to the regular regime.