Expanded Investment Options

Since January 2025, Estonia has expanded the range of financial assets permitted in investment accounts, offering investors more flexibility and enhanced tax benefits.

Crowdfunding Investments

Investors can now use their investment accounts to acquire crowdfunding assets. This includes loans and securities or participations obtained through licensed crowdfunding service providers, as regulated by European Parliament and Council guidelines. This change enables tax deferral on income—such as interest or profits from claims transfers—and allows losses from these investments to be offset against taxable income. Previously, each crowdfunding transaction was taxed individually, but the updated Income Tax Act now considers overall annual gains or losses.

Cryptocurrency Investments

Since January 2025, investment accounts also permit the inclusion of cryptocurrency. Regulated crypto-assets acquired through licensed crypto service providers or issuers authorized under the MiCA regulation are now allowed. This amendment enables investors to defer taxes on gains from the sale or exchange of regulated cryptocurrencies, with losses similarly recognized. Until these changes, crypto profits were taxed on a per-transaction basis without accounting for the net annual outcome.

Additional Asset Classes

The list of approved financial assets for investment accounts now includes:

• Covered Bonds: Both Estonian covered bonds and EU-compliant covered bonds that meet the requirements of the EU Covered Bonds Directive.

• Non-Publicly Traded Instruments: Financial instruments such as bonds issued by credit institutions.

Conversely, as of January 2025, investment accounts no longer allow the holding of units or shares of small funds without an operating license.

Streamlined Investment Processes and Expanded Account Providers

The recent amendments have simplified reinvestment procedures. Income generated from one investment can now be reinvested directly into another, without the need to transfer funds between accounts. Furthermore, the eligibility to open investment accounts has broadened. Beyond credit institutions, payment institutions, e-money institutions, and investment firms—regardless of whether they are based in Estonia or another contracting state—can now offer investment accounts, provided they meet the required regulatory conditions. For accounts opened with an investment firm before January 1, 2024, a provision allows these to be declared as investment accounts for tax deferral purposes, provided the acquisition costs are appropriately recognized as an investment account contribution for 2024.

Improved Fee Deductions

Management fees for securities accounts and fees associated with crowdfunding or cryptocurrency trading platforms are no longer treated as withdrawals from investment accounts; these costs can now be deducted from investment income. Additionally, while leveraged loans related to securities transactions remain subject to interest charges being treated as withdrawals, the principal repayment is not.

Retroactive Application

Most of these favorable changes have been applied retroactively from January 1, 2024, under the general procedural framework. Specific measures—such as the exclusion of small fund units without an operating license and the cryptocurrency-related amendments—took effect on January 1, 2025.

These regulatory updates are already in effect, offering investors in Estonia greater flexibility, improved tax treatment, and expanded opportunities to diversify their portfolios.