Extensive overview of legislation that came into force on 1 January
The Chamber of Commerce compiled an overview of the most important changes in the law for companies, which entered into force on 1 January 2022. On the first day of the new year, more than 200 pieces of legislation entered into force, which is half as much as last year.
The minimum wage will increase by 70 euros
starting from the new year, the minimum wage for full-time employment will increase from 584 euros to 654 euros per month. From 1 January, the minimum hourly rate will be 3.86 euros (previously 3.48 euros). The increase in the minimum wage will affect about 40,000 employees.
See also: Establishment of a minimum wage
The current system of compensation for sick days will continue
Until the end of 2022, the current system will continue, according to which the first day of illness is the employee’s own responsibility, the liability of employers for the payment of sickness benefits runs from the second to the fifth day, and the EHIF’s liability starts from the sixth day of illness. The aim of the amendment is to enable people to stay at home when the first symptoms of the disease appear, without losing a significant loss of income. Initially, the current sick pay scheme was to run until the end of 2021, but the country decided to extend it until the end of the next year. The principle that the employer must pay the employee sickness benefit in the amount of 70 per cent of the employee’s average salary remains in force.
See also: Occupational Health and Safety Act, Health Insurance Act, Social Tax Act
The Competition Authority will investigate the causes of insolvency
On 1 January, the Insolvency Service will start operating at the Competition Authority, its main purpose being to investigate the causes of illegally created insolvencies and to increase the payments made to creditors through its activities. In addition, the service will develop a common practice in the field of insolvency.
The Insolvency Service may carry out a special audit or a public inquiry into bankruptcy proceedings to verify the debtor’s activities. The trustee in bankruptcy can also apply for a special audit from the service, but the Service decides on the public investigation of bankruptcy proceedings on a case by case basis, depending on the debtor.
If, in the course of supervision, it becomes apparent that the debtor has committed an act with the characteristics of a criminal offense in connection with the occurrence of insolvency, the Insolvency Service shall notify the prosecutor or the police thereof. In addition, the Service may apply to the court for a business ban.
The Insolvency Service will be composed of at least three officials who may also involve independent experts or commission independent expertise.
The main purpose of the Insolvency Service is to combat malicious causes of insolvency and to reduce the situations in which individuals are released from liability because the proceedings end.
See also: Bankruptcy Act
Starting a business will get more expensive
From the new year, several important state fees will rise. For example, if you want to establish a private limited company or a public limited company through the portal of the e-business register, then the state fee will be 265 euros instead of 190 euros. If you create a private limited company or a public limited company through a notary, the state fee in the new year is 200 euros instead of 145 euros. The state fee for changing an entry in the commercial register increases from 18 euros to 25 euros in the case of a private limited company and a public limited company. In addition, the rates of state fees related to court proceedings will change.
See also: State Fees Act
The immigration quota will decrease
The immigration limit for 2022 is 1,311, which is four times less than in the current year. This is also the maximum size that the Aliens Act currently allows. Of the immigration limit, 300 has been reserved for industry; 200 for construction; 100 for transport and storage; 26 for athletes, coaches, judges and sports staff; 23 for creative workers; 20 residence permits for foreigners and 5 residence permits for foreigners coming to Estonia on the basis of an international agreement.
If the sectoral limits are not reached by 30 September 2022, the remaining part will be freely distributed within the immigration limit. At the beginning of the next year, there will be 637 residence permits as the quota for free distribution.
Temporary residence permits issued to third-country nationals for the purpose of employment, business, international agreement or overriding reasons relating to the national interest fall under the immigration threshold. As an exception, several residence permits have been exempted from the quota. For example, foreigners who are granted a temporary residence permit to work in an ICT profession, in a start-up company and as a top professional do not fall under the immigration threshold.
See also: 2022 immigration limit, Distribution of the immigration threshold
The tax interest rate will again be 0.06 percent per day
Starting from the end of the special situation until 31 December 2021, the tax interest rate is 0.03 percent per day. From January 1, the tax 20 rate will be 0.06 percent again. In addition, the temporary difference that the Tax Board may reduce the interest rate to zero when deferring the payment of the tax debt, will disappear starting from the new year. However, the principle remains that the tax authority has the right to reduce the interest rate by up to 50 per cent from the date of the decision to stagger the payment of the tax arrears.
See also: Taxation Act
Excise duty on one good will increase
Starting from the new year, the excise duty on tobacco products will increase by 5 percent in the case of cigarettes and smoking tobacco. The excise duty on fuel, electricity and alcohol will not change on 1 January. While the excise duties on fuel and electricity were originally due to increase on May 1, the state decided to postpone raising these excise duties until 2023.
See also: Alcohol, Tobacco, Fuel and Electricity Excise Duty Act
The burden of proof becomes more favourable for the consumer
If a defect in a thing sold to a consumer occurs within the first six months from the sale of the thing, the current law presupposes that the defect existed at the time of sale and the seller is responsible for remedying the defect unless he proves that the defect was due to another circumstance. Starting from the new year, this period is extended from six months to one year. Thus, if the defect becomes apparent within one year of delivery of the thing to the consumer, the law further presupposes that the defect already existed at the time of delivery of the thing, unless the seller proves otherwise.
See also: Law of Obligations Act
The public sector has to start arranging green public procurements
A regulation establishing green public procurement criteria for furniture, cleaning products and services, office IT equipment and copy and drawing paper will enter into force on 1 January. This means that for the above products and services, the contracting authority must comply with the criteria for green public procurements. The aim of the amendment is to guide contracting authorities to make more extensive use of environmentally friendly criteria in public procurements and thereby reduce the negative environmental impact of the goods and services they purchase.
See also: Green public procurement criteria
Enterprise Estonia and KredEx will merge
From 1 January, Enterprise Estonia will be merged with the KredEx Foundation, and the new institution will be named the Enterprise and Innovation Foundation, abbreviated EIF. More than 40 regulations are being amended in this regard. These changes will not have a significant impact on companies.
See also: Amendment of regulations in connection with the merger of Enterprise Estonia and KredEx, Amendment of regulations in connection with changing the name of Enterprise Estonia and KredEx
An agreement for the transfer of digital content and an agreement for the provision of digital services will be added to the Law of Obligations Act
From the new year, detailed rules will apply to the agreements for the transfer of digital content and for the provision of digital services. Examples of digital content include e-books, video and music files, computer programs and smartphone applications. An example of a digital service is a cloud service or a streaming service. The new rules will apply when a business sells digital content or offers a digital service to a consumer.
The Law of Obligations Act will set out the criteria that the digital content or the service must meet. For example, it must be fit for normal use, be in the latest available version, and be up to date. The parties may deviate from these criteria, but then the consumer must separately agree to such a deviation at the time of concluding the agreement.
The law will also lay down rules relating to the liability of an undertaking. In the case of a single transfer or provision of digital content or a digital service, such as the purchase of a computer program, the undertaking shall be liable for any defect existing at the time of the transfer or provision of the content or service and become apparent within two years after the transfer or provision of the content or service. In the case of continuous supply or provision of digital content or a service, such as a streaming service, the undertaking will be liable for any defects that occur throughout the agreement’s term of validity. The absence of a defect at the time of delivery of the digital content or service must be demonstrated by the undertaking within one year.
In addition, the business must inform the consumer of the updates and provide them with the updates, including security updates that are necessary for the digital content or service to comply with the terms of the agreement.
See also: Law of Obligations Act
Monopolies will have to pay a supervision fee to the Competition Authority
Amendments to the Competition Act will enter into force on 1 January, requiring certain monopolies to pay an annual supervision fee to the Competition Authority. The annual supervision fee for district heating, electricity, gas, water and mail services will be 0.2 per cent of the sales revenue of the regulated service, and the supervision fee for the airport operator and for port authorities will be 0.02 per cent of the sales revenue of the regulated service. Monopolies will be allowed to include the supervision fee in the price of the services provided to the final consumer.
See also: Competition Act
The deadline for submitting the packaging report will change
While previously, the packaging report of the previous year had to be submitted to the Packaging Register no later than on 1 September, starting from the new year it must be submitted no later than on 31 March. The change affects recovery organisations and packaging companies that place packaged goods on the market but have not transferred responsibilities to the recovery organisation. The state justifies bringing forward the deadline for submission of the report, stating that if necessary, the Environmental Board and the Tax and Customs Board can then start dealing with non-reporters earlier than before. Information related to the audit of the packaging report, such as a summary of a sworn auditor’s report, must still be submitted to the Register by 1 September at the latest.
Another important change is that starting from the new year, the Packaging Register will publish on its website the packaging waste recycling targets of the packaging companies and the recycling organisation, so that the general public will have an easier overview of what is happening in the field of packaging.
See also: Statutes of the Packaging Register
The waterway fee will remain halved in the new year
Starting from the new year, the current support measure for maritime transport will be extended, according to which the waterway fee will be 50 percent lower for all ships entering Estonian ports or port raids. The purpose of the amendment is to continue supporting international maritime transport through Estonian ports and to motivate shippers to direct their cargo flows through Estonian ports. The measure will be valid until 31 December 2022.
See also: Maritime Safety Act
The possibilities for cancelling a lease agreement will be extended
The new year will bring a positive change for those who plan to buy a property used by tenants at an auction. In the future, the amendment to the Law of Obligations Act will allow the new owner in such a situation to terminate the existing lease agreements even if the new owner does not urgently need the premises himself.
See also: Law of Obligations Act
Significant changes regarding branches will take effect
Amendments to the Commercial Code and the Accounting Act concerning the activities of a branch of a foreign company in Estonia will enter into force on 31 December this year. In the future, a foreign company will be able to choose whether or not to enter a branch in the Commercial Register in Estonia. In addition, the Commercial Code removes the requirement that the branch be liquidated before it can be deleted from the register. An amendment will also enter into force on 31 December, which will allow a foreign company to register a branch in Estonia electronically. Until now, this could only be done at a notary.
The changes also concern the rules for submitting an annual report. The annual report of a foreign company must henceforth be in accordance with the law applicable to the foreign company. If a foreign company is not required to disclose its annual report in its own country, a branch registered in Estonia will no longer have to prepare or submit this report for the Commercial Register. If a foreign company does not have to publish the report and it is not a company of the European Economic Area, the branch registered in Estonia must prepare and submit a separate report on the branch itself to the Commercial Register. The report of the branch must be prepared in accordance with the same requirements that apply to Estonian companies. The amendments related to the annual reports apply to the financial year beginning after the amendments come into force.
See also: Commercial Code, Accounting Act
Retail companies will be able to enter into variable hour agreements with employees
We remind you that on December 15 of this year, amendments to the Employment Contracts Act entered into force, which give a company operating in the retail sector the opportunity to enter into a variable hour agreement with an employee, i.e. to agree on working hours as a certain period.
Such an agreement will be permitted by law only if certain conditions will be met. For example, an employer may only enter into a variable hour agreement with an employee who works part-time for at least 12 hours a week and whose hourly rate is at least 1.2 times the minimum hourly rate. In 2022, an employee must be paid at least 4.64 euros per hour to enter into a variable hour agreement. In addition, the law stipulates that an employee may work up to eight hours per week (variable hours) in addition to the agreed working hours, and that the total of agreed working hours and variable hours may not exceed 40 hours per week.
See also: Employment Act
If you have any questions about the legislation coming into force in the new year, you can contact the lawyers of the Chamber of Commerce by e-mail: juristid@koda.ee.