Estonia* PROFILE CONTENTS

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1 PROFILE CONTENTS Estonia* INTRODUCTION 2 LEGAL AND REGULATORY 4 TAXATION 6 BANKING 10 PAYMENT INSTRUMENTS 11 PAYMENT SYSTEMS 13 EUROPEAN PAYMENTS 15 CASH MANAGEMENT 16 ELECTRONIC BANKING 18 TRADE FINANCE 19 USEFUL CONTACTS 21 * Guides specifically designed for treasury managers offering a detailed picture of the banking and cash management arrangements for an extensive range of locations. Please note the information is of a general nature only and is subject to change. It does not constitute financial, legal, tax or other professional advice.

2 INTRODUCTION General Capital/Other major cities: Tallinn/Tartu, Pärnu Area: 45,228km 2 Population: 1.26m Language: Estonian Currency: Euro (EUR) Country telephone code: 372 Weekend: Saturday and Sunday National holidays: Source: 2nd half Aug, Dec Jan, 24 Feb, 25 Mar, 1 May, 23, 24 Jun, 20 Aug, Dec Business hours: 09:00 17:00 (Mon Fri) Banking hours: 09:00 17:00 (Mon Fri) Stock exchange: NASDAQ OMX Baltic Exchange Leading share indices: BALTIX (Baltic index) OMXT index Government Legislature Parliamentary republic with a unicameral Parliament (Riigikogu). Riigikogu 101 members elected to serve four-year terms. The president is elected every five years. Head of state Toomas Hendrik Ilves, president since 9 October Political leader Sectoral distribution of GDP (% of GDP) Agriculture 3.9% Industry 30% Services Taavi Roivas, prime minister since 26 March % (2013 estimate) Please note that the information contained in this document is of a general nature only and is subject to change whether for economic, political, social or other reasons. It is not intended to be comprehensive and does not constitute financial, legal, tax or other professional advice on which you should rely. Accordingly if you are planning any business activity in the country or taking, or refraining from any action on the basis of the information in this document, you must obtain your own independent professional advice. The materials contained in this document were assembled in January 2015 (unless otherwise dated) and were based on the law enforceable and information available at that time. We make no representations, warranties or guarantees (express or implied) that the information in this document is complete, accurate or up to date. We will not be liable for any liabilities arising under or in connection with the use of, or any reliance on, this document or the information contained within it. 2

3 Economy Q2 Q3 Q4 Year Q1 Exchange rate* (EEK/USD or EUR/USD**) Interest rate* (For stocks up to 1 yr) (%) NA NA NA Consumer inflation (%) Ø Unemployment (%) NA GDP volume growth (%) NA GDP (EEK bn to 2010, EUR m from 2011)** ,216 17,415 18,435 19,526 GDP (USD m) 19,127 18,981 22,541 22,376 24,476 25,907 GDP per capita (USD) 14,713 14,601 17,474 17,345 18,973 20,083 BoP (goods/services/income) as % GDP NA * Period average. ** On 1 January 2011, Estonia joined the euro (EUR) at the rate of EEK per EUR 1. Sources: IMF, International Financial Statistics, May 2015 and 2014 Yearbook. Country credit rating Fitch Ratings rates Estonia for issuer default as: Term Local currency rating Foreign currency rating Short F1 Long A + A + Long-term rating outlook Stable Source: June

4 LEGAL AND REGULATORY Central bank Bank supervision Resident/non-resident status Bank accounts Reporting Exchange controls Re-established in 1990 after a break of 50 years, the Bank of Estonia (Eesti Pank) is an independent institution operating in accordance with the Eesti Pank Act and its amendments, and the Statute of Eesti Pank. The Bank of Estonia is a member of the European System of Central Banks (ESCB). The Financial Supervision Authority (Finansinpektioon) supervises the banking sector within Estonia. A company is considered resident if it is incorporated under Estonian law. Foreign exchange accounts and domestic currency (EUR) accounts can be held by residents both domestically and abroad. Resident domestic currency accounts are convertible into foreign currency. Non-resident bank accounts are permitted in both foreign and domestic (EUR) currency. Non-resident domestic currency accounts can be held abroad and are convertible into foreign currency. Interest can be offered on current and deposit accounts. Overdraft facilities are available to residents and non-residents. All resident cross-border payments and non-resident domestic payments exceeding EUR 10,000 must be reported every calendar month to the Bank of Estonia for balance of payments purposes. Banks are reasponsible for submitting transactions data to the Bank of Estonia on behalf of their corporate clients. Data is reported electronically. Reports must be submitted within seven days of the end of the reporting month. Estonia joined the European Union (EU) in May The euro (EUR) is Estonia s official currency. Commercial banks can freely effect transactions in convertible currencies and may freely quote their own exchange rates. There is a forward exchange market. 4

5 Anti-money laundering/counter-terrorist financing Supplied by BCL Burton Copeland ( Data as at January Estonia has enacted anti-money laundering legislation, including legislation implementing the three EU anti-money laundering directives (the Penal Code of 2002, the Minister of Finance Regulation No 10 of 3 April 2008, the Minister of Finance Regulation No 11 of 3 April 2008, and the Money Laundering and Terrorist Financing Prevention Act of 2008). Guidelines have also been issued by the Financial Supervision Authority. Estonia is a member of the Council of Europe MONEYVAL Select Committee, which is an associate member of the Financial Action Task Force (FATF). Estonia has established a financial intelligence unit (FIU), the Rahapesu Andmeburo (Money Laundering Information Bureau), which is a member of the Egmont Group. Account opening procedures require formal identification of the account holder. Customer due diligence must be performed upon establishing a business relationship, or when carrying out an occasional transaction or a series of linked transactions of EUR 15,000 or more, or upon suspicion of money laundering or terrorist financing regardless of the amount, or upon suspicion of the adequacy or validity of previously obtained identification data on the customer. Financial institutions must identify beneficial owners, including collecting information about the ownership and control structure of any legal person or trust. The purpose and nature of the business relationship and transactions must be established and the business relationship must be constantly monitored. This should include regularly verifying the data used for identifying a person and, if necessary, identifying the source and origin of funds used in the transaction. All financial institutions in the broadest sense have to record and report suspicious transactions to the FIU. Individuals entering or exiting the EU must declare currency of EUR 10,000 or more to the customs authorities. Records must be kept for at least five years after the end of the contractual relationship with the customer. 5

6 TAXATION All tax information supplied by Deloitte Touche Tohmatsu ( and Deloitte Highlight, Resident/non-resident Tax authorities Tax year/filing Corporate taxation A company is considered to be resident if it is founded or formed under Estonian law. European public limited companies and European associations with their registered seat in Estonia also are deemed to be residents. A company is considered to be non-resident if the above criteria do not apply. A permanent establishment (PE) is considered non-resident, but is taxed as a resident legal entity. Tax and Customs Board. Ministry of Finance. The Estonian taxable period for companies is a calendar month. Filing and payment must be made on a monthly basis by the tenth day of the calendar month following the month of taxation. For non-vat registered taxpayers, filing is required only if taxes upon profit distribution and payroll are due for the period. Consolidated returns are not permitted; each company must file a separate return. Residents are taxed on worldwide income, while non-residents are taxed only on income derived from Estonian sources. This rules applies both to Estonian resident companies and to permanent establishments of foreign companies. Resident companies and PEs of non-resident companies registered with the Estonian authorities are not subject to corporation tax on their incomes but are subject to tax on any profit distributions made, for example dividends paid, profits distributed in the course of share capital reduction or liquidation, and gifts and expenses not related to the business of the payer. Fringe benefits (benefits in kind) are also taxed at the company (employer) level, although they are considered part of the employment income of an employee. There is no surtax or alternative minimum tax. Any resident company or PE of a non-resident is subject to tax on the payments described above at a rate of 20/80 of the net amount (equal to 20% of the gross amount distributed). Dividends paid by Estonian resident companies are not subject to withholding tax. Incoming dividends remain tax exempt even in the case of any further distribution if they are received from: A subsidiary where the resident company or Estonian PE of a non-resident owns at least 10% of the shares or votes; or A foreign PE of a resident company. The above exemption automatically applies to dividends received from the European Economic Area (EEA) or Switzerland, unless the payer of the dividend is from a low tax territory or is exempt from corporate income tax in the country of residence. The Estonian tax exemption also applies to dividends 6

7 Advance tax ruling availability received from any other country, but only if the dividends have been subject to foreign withholding tax or if the underlying profit has been subject to tax. If an Estonian company or Estonian PE of a non-resident owns less than 10% of the subsidiary, the credit method applies. This means that dividends received become taxable upon subsequent redistribution by the parent company in Estonia. Foreign tax withheld from dividends can be deducted from Estonian distribution tax payable. There are no tax losses as corporate income tax applies only to distributed profits. Financial instruments There are no specific tax rules for financial instruments. Interest and financing costs As the Estonian corporate income tax system is different from the classical corporate income tax system, where tax is paid on recognition of profits, interest deductibility is irrelevant in Estonia. However, if the Estonian tax authority finds that certain costs are not business related, corporate income tax will be immediately assessed on the whole non deductible amount. Foreign exchange There are no specific tax rules for foreign exchange. Advance rulings are available in Estonia and are binding on the tax authorities for non-transfer pricing issues. Capital gains tax Capital gains are not taxed separately; they are treated as ordinary income. Gains derived by a company are not taxed if retained. Upon distribution of the gain, the net distributed amount will be taxed at a rate of 20/80 (equal to 20% of the gross amount distributed). Withholding tax (subject to tax treaties) Payments to: Interest Dividends Royalties Technical service fee Resident companies None None None None Non-resident companies None None 0 10% 0%/10% Withholding tax is not applied to any payments made to resident companies (e.g. dividends, royalties and interest payments). Withholding tax is not applied to dividend payments. As from 1 January 2014, Estonia does not levy withholding tax on interest, except where a non-resident investor derives interest income from an Estonian contractual fund or other pools of assets. This exception applies to contractual funds or other pools of assets if more than 50% of the assets at the time the interest is paid or at any period during the previous two years consist, directly or indirectly, of Estonian-situs real property and the non-resident held at least 10% in the fund/pool at the time of payment. Despite the exemption from withholding tax, interest payments may be subject to corporate taxation under the transfer pricing rules, at the level of the payer company, if unrelated parties would not have conducted the transaction under similar conditions. 7

8 Tax treaties/tax information exchange agreements (TIEAs) Royalty payments to qualifying EU or Swiss-resident companies may be exempt if they meet the requirements for application of the EU interest and royalties directive. The withholding tax exemption will not apply to any part of the royalties that exceeds the value of similar transactions carried out between unrelated persons. A 10% withholding tax applies if technical services are rendered in Estonia. Withholding tax is not applicable if the services are performed outside Estonia or if there is a tax treaty between Estonia and the service provider s country of tax residence that provides for an exemption. Estonia has exchange of information relationships with 91 jurisdictions through 57 double tax treaties, no TIEAs and one multilateral mechanism. Thin capitalisation Transfer pricing Anti-avoidance Stamp duty There are no thin capitalisation rules. If the value of a transaction between a resident company and a related person, or between a non-resident PE and a related person, differs from the value that would be used for similar transactions between unrelated persons, the tax authorities may adjust the amounts to reflect those that would have been used by the unrelated persons under similar conditions. The methods applied are, among others, comparable uncontrolled price, cost-plus, resale price, profit split, and transactional net margin. It is possible to use other methods if necessary. In general, Estonia follows the OECD guidelines. Income tax is charged either on the income the taxpayer would have derived or the expense the taxpayer would not have incurred had the transaction been conducted with unrelated persons under similar conditions. A resident company or PE of a non-resident is obliged to compile detailed documentation (including a master file of the international group and a country-specific file of the Estonian company) describing transactions made with its related persons if it meets at least one of the following criteria: It is an Estonian resident credit institution or insurance company; It is an Estonian resident company listed on a stock exchange; or It is an Estonian resident company, or a non-resident with a PE in Estonia, that has, taking into account all the Estonian and foreign-related entities: At least 250 employees; An annual turnover of at least EUR 50 million; or Consolidated assets of at least EUR 43 million. In addition, any other company that has entered into a transaction with a person situated in a low tax territory is obliged to compile the documentation mentioned above. It is necessary to document cost-sharing arrangements. A general anti-avoidance rules allows the tax authorities to apply what is, in effect, an economic substance rule, and special scrutiny is given to payments and fees to low-tax jurisdictions. No stamp duty is levied on loan agreements. 8

9 Cash pooling Property tax Estonia has no specific tax rules for cash pooling arrangements. An annual land tax is imposed on the assessed value of land and is paid by the owner or the user of land at rates ranging from 0.1% to 2.5%. Sales taxes/vat (incl. financial services) Financial transactions/banking services tax Payroll and social security taxes Resident companies with an annual turnover in Estonia exceeding EUR 16,000 are required to register for VAT. The same threshold is applicable for non resident companies with a PE in Estonia. Non-resident companies generating local supply, which may not be reverse charged by any Estonian client or intra-community supply in Estonia, are required to register for VAT. VAT is levied on individuals and legal entities on the sale price of goods and services supplied by the taxpayer and on the customs value of imported and exported goods at the following rates: 20% standard rate; 20% on imported goods and services; 9% on books, accommodation services, certain types of medicine and periodicals; and 0% on exports. Exempt supplies of goods and services include medical services, certain training and education services, real estate rental services, postal services, insurance, financial services, securities, lottery tickets and the arranging of gambling. There are no specific financial transactions/banking services taxes in Estonia. Employers are not subject to payroll taxes in Estonia. Employers in Estonia must make social security contributions on employmentrelated payments made to individuals. Social security contributions are also due by Estonian registered entities making payments to the members of their management and supervisory boards or to sole contractors who are not employees and who are not registered with the Estonian Commercial Register as self-employed individuals. Certain payments are specifically exempt from social security tax by law. The rate of social tax is 33% (20% to the state pension fund and 13% to the state health insurance). Only the employer is liable to pay 33% social tax, and no ceiling exists in respect of employees. Unemployment insurance contributions must also be paid by both employers and employees. The liability to make contributions is not related to the tax residence of the employee. Therefore, contributions are due by non-resident employees working in Estonia, as well as by employers having such non-resident employees. The law provides that the contribution rates are 1.6% for the employee and 0.8% for the employer. Where an employee has been assigned to the mandatory funded pension scheme (obligatory for those born on 1 January 1983 and thereafter), the employer withholds the mandatory funded pension contribution from the employee s salary (2% of gross salary) and remits this to the Estonian tax administration. 9

10 BANKING Major banks Bank Total assets (EUR millions) 30 September 2014 Swedbank 8,273 SEB Pank 4,466 Nordea Bank AB Estonia Branch 3,077 Danske Bank AS Estonia Branch 2,034 DNB Pank 639 Sources: The Financial Supervision Authority and January Overview There are eight licensed banks operating in Estonia, in addition to eight branches of foreign banks and one foreign bank representative office. The Estonian banking sector is highly concentrated, with the two largest banks Swedbank and SEB Pank accounting for 62% of the banking sector s total assets at the end of September Approximately 90% of Estonia s banking sector is controlled by Scandinavian banks. Sweden s Swedbank has expanded rapidly in Estonia, Latvia and Lithuania and is currently the leading pan-baltic bank. SEB Pank is wholly owned by Swedish banking group SEB, while Danske Bank AS Estonia Branch (formerly AS Sampo Pank) is part of Denmark s Danske Bank. On 1 April 2014, Nordea Group transferred its Estonian operations from Nordea Bank Finland Estonia Branch to Nordea Bank AB Estonia Branch, a branch of the Swedish parent company Nordea Bank. Foreign bank branches play an important role in the Estonian retail banking sector, accounting for approximately 30% of the banking sector s total assets. 10

11 PAYMENT INSTRUMENTS Payment statistics Thousands of transactions % change Traffic (EUR millions) / % change 2014/2013 Cheques Credit transfers 108, , , , Debit transfers 1, , , , Direct debits 19, Debit/Credit card payments 230, , , , Total 359, , , , Source: Bank of Estonia, January Credit transfers Direct debits Cheques Credit transfers can be paper based or automated. The majority (99%) of all credit transfers are electronic. Credit transfers are used for both high-value corporate and low-value retail payment transactions. Credit transfers are used by the government and companies for salary, supplier and benefit payments. Credit transfers can be initiated via electronic banking systems, the telephone and online. High-value and urgent credit transfers are cleared and settled via TARGET2 Eesti in real time and on a same-day basis. On 1 February 2014, SEPA credit transfers replaced all legacy credit transfer schemes in Estonia. Low-value, non-urgent and high-volume SEPA credit transfers are settled via STEP2 on a same-day or next-day basis. All banks in Estonia, including the central bank, currently participate in the SEPA Credit Transfer Scheme. (For more information on SEPA credit transfers, see European Payments.) Credit transfers accounted for 34.5% of the volume of all cashless payments in 2014, and 92% of the value. On1 February 2014, Estonia s domestic direct debit service was replaced by an e-bill standing payment order service. This new service, known as an e-invoice standing order, can be used for low-value recurring payments such as utility bills. On 1 February 2014, SEPA direct debits were introduced in Estonia as a separate cross-border service. (For more information on SEPA direct debits, see European Payments.) Cheque usage is in decline in Estonia due to the increasing preference for electronic payments for both high-value and low-value transactions. Cheques are cleared bilaterally between banks. 11

12 Card payments The use of payment cards in Estonia, particularly debit cards, has increased rapidly in recent years. There were approximately 1.48 million debit cards and 343,827 credit cards in circulation in Estonia at the end of December Payment cards accounted for 64.8% of the volume of all cashless payments in 2014, but just 1.9% of the value. Visa Electron and Cirrus/Maestro are the principal debit card brands issued in Estonia. Visa and MasterCard are the principal credit card brands issued in Estonia. American Express credit cards are also available. The majority of all card payments are processed via Nets Estonia (formerly Card Centre of Banks). Nets Estonia operates an automated clearing house that authorises card transactions, collects card transaction data and calculates the gross balance of each bank. All payment cards issued in Estonia are SEPA-compliant EMV chip cards. (For more information on SEPA-compliant payment cards, see European Payments.) There were 848 ATMs and 29,344 POS terminals in Estonia at the end of December Approximately 95% of ATMs permit cross-usage of locally issued cards, as well as Visa and MasterCards. All ATMs and POS terminals are EMV compliant. 12

13 PAYMENT SYSTEMS Type Participants Transaction types processed Operating hours TARGET2-Eesti is Estonia s national component of the pan-european TARGET2 real-time gross settlement (RTGS) system. Three Eurosystem central banks the Banca d Italia, the Banque de France and the Deutsche Bundesbank jointly provide the single technical infrastructure, the Single Shared Platform (SSP), of TARGET2 and operate it on behalf of the Eurosystem. STEP2, the pan-european ACH for bulk retail payments, is a multilateral net settlement system operated by the Euro Banking Association (EBA). ESTA (Settlement System of Ordinary Payments), a multilateral deferred net settlement system for retail payments operated by the Bank of Estonia, ceased operating on 31 January Cross-border payments in EUR can be made through the EBA s EURO1, STEP1 or STEP2 payments systems. SEB Pank, Pohjola Bank (Estonian branch) and Swedbank Estonia participate in EURO1 and STEP1 as directly addressable sub participants. (For more information, see European Payments.) Cross-border payments can also be routed via SWIFT and settled through accounts held with correspondent banks abroad. There are 15 direct participants in TARGET2-Eesti. SEB Pank participates directly in STEP2. All other banks in Estonia are indirect participants through their parent banks or other direct participant. TARGET2-Eesti processes high-value and urgent EUR-denominated domestic and cross-border credit transfers. STEP2 processes low-value, non-urgent and high-volume domestic and cross border SEPA credit transfers and direct debits. There is no maximum value threshold. TARGET2-Eesti operates from 08:00 to 19:00 EET (Eastern European Time), Monday to Friday. STEP2 operates 24 hours a day, Monday to Friday. Clearing cycle details TARGET2-Eesti TARGET2-Eesti settles in real time and with immediate finality. 18:00 EET: cut-off time for customer payments. 19:00 EET: cut-off time for interbank payments. All payments are processed electronically via SWIFT. Final settlement takes place across participant banks correspondent accounts held at the TARGET2 SSP. 19:00 EET: the excess balance on each participant s SSP account is transferred back to Eesti Pank. This is transferred back to the SSP account the following day. 13

14 STEP2 16:00 CET: cut-off time for same-day settlement of SEPA credit transfers. 21:00 CET: cut-off time for overnight settlement of SEPA credit transfers. 01:00 CET: cut-off time for next-day settlement of SEPA credit transfers. Currency centre holidays* 2nd half , 26 Dec Jan, 25, 28 Mar, 1 May, 25, 26 Dec * Source: 14

15 EUROPEAN PAYMENTS SEPA initiative The Single Euro Payments Area (SEPA) is an initiative of the European Payments Council, with the support of the European Commission (EC) and European Central Bank, to create an integrated payment infrastructure across Europe, which is part of the wider objective of creating a true single European market. SEPA involves the creation of a zone in which all electronic, EUR-denominated retail payments are to be treated as domestic payments. Common payments instruments, infrastructures, procedures and technical standards are therefore requisite. The SEPA initiative covers all 28 European Union (EU) member states, including the 19 official eurozone members (Lithuania officially joined the eurozone on 1 January 2015), the four European Free Trade Association (EFTA) member states and Monaco. SEPA payment instruments Common payment instruments for retail transactions have gradually been introduced across the SEPA area since There is no maximum value threshold in place for SEPA retail payment instruments. The SEPA initiative does not apply to urgent, high-priority payments or to cheques. SEPA credit transfers (SCTs) for EUR-denominated retail payments have been available since 28 January SCTs are open message format, XML-based transfers that comply with international standards (ISO20022). When executing an SCT, the payee s bank identifier code (BIC) and international bank account number (IBAN) must be supplied to the executing bank by the initiator. SEPA direct debits (SDDs) for EUR-denominated retail payments were introduced on 2 November Since 1 November 2010, it has been compulsory for banks within the eurozone to provide core (customer) SDD services. B2B (business-to-business) SDD services remain optional. On 1 November 2014, banks outside the eurozone were required to accept SEPA direct debits. Migration to SCTs and SDDs was completed within the eurozone on 1 August National niche payment instruments are to be phased out by 1 February Full SEPA migration for EUR-denominated payments outside the eurozone is to be finalised by 31 October All payment cards issued within the SEPA area are required to be SEPA compliant EMV chip cards. All ATMs and POS terminals in the SEPA area are also now EMV enabled. Systems for euro-denominated payments The Euro Banking Association s (EBA s) STEP1 or STEP2 systems can be used to effect individual and bulk retail payments in EUR respectively. STEP1 s cut-off time for same-day settlement is 14:30 CET. STEP2 is the only pan-european ACH for SEPA payments (SCTs and SDDs), reaching all 34 SEPA countries (including Monaco and San Marino). The cut-off times for same-day settlement, overnight settlement and next-day settlement of SCTs in STEP2 are 16:00 CET, 21:00 CET and 01:00 CET respectively. The cut off times for the same-day settlement of Core SDDs and B2B SDDs are 11:00 CET and 12:00 CET respectively. Alternatively, bilateral arrangements are in place between a number of SEPA-compliant Clearing and Settlement Mechanisms (CSMs) enabling cross-border retail payments in EUR. The European Commission s Payment Services Directive (2007/64/EC) was implemented into the national legislation of all European Economic Area (EEA) member states in 2010, in order to regulate payment services and their providers throughout the EEA. As a result, all cross-border credit transfers, direct debits and card payments below EUR 50,000 within the EEA now have the same charges as their domestic equivalents. High-value/urgent cross-border payments in EUR can be made through TARGET2 s Single Shared Platform, which is used by 23 participant countries and operated by the Banca d Italia, the Banque de France and the Deutsche Bundesbank on behalf of the European System of Central Banks. The cut-off times for same-day settlement in TARGET2 are 17:00 CET for customer payments and 18:00 CET for interbank payments. High-value/urgent payments in EUR can also be effected through the EBA s EURO1 system. EURO1 s cut off time for same-day settlement is 16:00 CET. TARGET2, EURO1 and STEP1 are all based on SWIFT payment messages. International payments can also be routed via SWIFT through correspondent banking arrangements. 15

16 CASH MANAGEMENT Domestic Notional pooling Notional pooling is permitted between resident and non-resident accounts. One or more legal entities may be included. Credit institutions are not allowed to offset notionally pooled credit and debit balances and, as such, notional cash pools can be expensive to operate. Interest-rate enhancement services are offered to both residents and nonresidents as an alternative to notional pooling. Cash concentration Single and cross-currency cash concentration is permitted between resident and non-resident accounts. One or more legal entities may be included. Central bank reporting requirements apply. Cross-border Lifting fees Short-term investments Cross-border notional cash pools are permitted, but not widely used due to the restrictions on banks offsetting credit and debit balances. Cross-currency interest rate enhancement is offered as an alternative. Single-currency and cross-currency cross-border cash concentration techniques are permitted between resident and non-resident accounts. One or more legal entities may be included. Central bank reporting requirements apply. Per-item-based fees are applied to funds transfers between resident and non resident accounts. Interest can be earned on current accounts and short-term deposits. Time deposits are offered in EUR or major foreign currencies, with maturities ranging from one day to two years. Certificates of deposit (CDs) are offered by commercial banks, with maturities of up to one year. Short-term CDs have not been issued by the Bank of Estonia since Commercial paper is offered, with maturities of three to six months. The Estonian government has not tended to issue Treasury bills or other short term securities. Repurchase agreements are available. Money market funds are available. 16

17 Custody and securities settlement Information provided by and Depository AS Eesti Väärtpaberikeskus/Estonian CSD (ECSD). The ECSD acts as the central securities depository for equities, ETFs, government bonds, corporate bonds, T-bills, commercial paper, investment funds and rights and warrants. The ECSD is owned by the Tallinn Stock Exchange. Both companies belong to the international concern NASDAQ OMX. BIS Model Model 1. Settlement cycle T+2. TARGET2-Securities } } The ECSD is set to migrate to T2S in the fourth wave of the migration plan, scheduled for 6 February

18 ELECTRONIC BANKING Electronic banking is available in Estonia and offered by all of the country s banks. There is no bank-independent electronic banking standard in Estonia; each bank offers its own proprietary system for corporate banking purposes. Services include balance and transaction reporting and payment initiation. Internet banking is offered by many of the country s banks and is popular among retail users. There were an estimated two million internet banking users in Estonia at the end of August Estonia has an estimated internet penetration rate of 80%. E-bill presentment is available via the arved.ee portal. Mobile banking is offered by many of the country s banks. Mobile penetration in Estonia exceeds 100%. 18

19 TRADE FINANCE Trading partners* Imports Import Finland 15.1%, Germany 10.7%, Sweden 10.7%, Latvia 10%, Lithuania 9%, Poland 6.6%, China 4.4%, Russia 4.1%. Export Sweden 16.8%, Finland 15.3%, Russia 12.7%, Latvia 9.2%, Lithuania 5.7%, Germany 4.8%. Documents * The World Factbook Washington, DC: Central Intelligence Agency, 2013 ( No documentation is required for imports from another EU country, although it is good practice to send a commercial invoice. In order to import goods into Estonia from outside the EU, a customs declaration, commercial invoice, bill of lading, packing list and, in certain cases, certificate of origin are required. Licences Licences are required for importing specific products and for importing items from certain countries. Licences are required for importing items with quantitative restrictions that originate from outside the EU and for items from another EU country that are deemed to be of national interest or a strategic nature. Administrative visas from the relevant ministry or the customs authorities are required for certain imports from outside the EU. These visas are required for imports listed under the European Coal and Steel Community (ECSC) Treaty from countries outside the ECSC. An open general licence is required for importing food, alcohol, tobacco, fuel and energy, and precious metal products. Licences with quotas are required for importing certain food items, plants, seeds, species of rare fauna and flora, fertilisers, medicines, narcotic and psychotropic substances, motor vehicles, ozone-depleting products, waste, radioactive materials, strategic items, armaments, ammunition and explosives. Taxes/tariffs and other fees Imports into Estonia are subject to VAT of 20%. Estonia applies the EU customs code and all associated regulations and commercial policies on all items entering the country from outside the EU. Imports into Estonia are subject to a variety of tariffs. Tariffs are higher for agricultural imports than for non-agricultural imports. Prohibited imports A negative list (of products that may not be imported) is in operation. In accordance with EU regulations and UN Security Council resolutions, it is prohibited to import certain items into Estonia, in order to protect fauna and flora, and for national security and moral reasons. 19

20 Exports Financing imports and exports Documents No documentation is required for exporting items to another EU country, although it is good practice to send a commercial invoice. In order to export goods from Estonia outside the EU, a customs declaration, commercial invoice, bill of lading, packing list and, in certain cases, certificate of origin are required. Licences Licences (without quotas) are required for exporting certain food items, alcohol, protected fauna and flora, precious metals and stones, items with cultural value, medicines, narcotic and psychotropic substances, waste products, radioactive materials, strategic items, armaments, ammunition and explosives. Taxes/tariffs and other fees No taxes are charged on exports from Estonia. Prohibited exports A negative list (of products that may not be exported) is in operation. Exporting certain items is prohibited in accordance with EU regulations and UN Security Council resolutions. Imports There are no financing requirements for imports. Exports There are no financing requirements for exports. 20

21 USEFUL CONTACTS Bank of Estonia (Eesti Pank) Financial Supervision Authority Leading banks: Danske Bank DNB Pank Nordea Bank SEB Pank Swedbank Estonian Banking Association Ministry of Finance Ministry of Economic Affairs and Communications Estonian Chamber of Commerce and Industry Estonian Investment and Trade Agency Enterprise Estonia NASDAQ OMX Baltic Nets Estonia This document is produced by HSBC Bank plc and members of the HSBC Group, together with their third-party contributor. It is not intended as an offer or solicitation for business to anyone in any jurisdiction. The information contained in this document is of a general nature only. It is not meant to be comprehensive and does not constitute financial, legal, tax or other professional advice. You should not act upon the information contained in this document without obtaining your own independent professional advice. The views and opinions expressed by the third-party contributor are their own and not necessarily those of HSBC. The information contained in this document has not been independently verified by HSBC. This document contains information relating to third parties. The information does not constitute any form of endorsement by these third parties of the products and/or services provided by HSBC or any form of cooperation between HSBC and the respective third parties. Under no circumstances will HSBC or the third-party contributor be liable for (i) the accuracy or sufficiency of this document or of any information, statement, assumption or projection contained in this document or any other written or oral information provided in connection with the same, or (ii) any loss or damage (whether direct, indirect, consequential or other) arising out of reliance upon this document or any opinion or statement made in this document. All efforts have been made to ensure that the information contained is current at the first date of publication. HSBC and the third-party contributor does not undertake, and is under no obligation, to provide any additional information, to update this document, to correct any inaccuracies or to remedy any errors or omissions. No part of this document may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior written permission of HSBC and the third-party contributor. Any products or services to be provided by HSBC in connection with the information contained in this document shall be subject to the terms of separate legally binding documentation.l 21