What Expenses Are Not Deductible?

Here are some examples of expenses that are not considered deductible:

• Fuel and car trips within the same country. Travel between countries to visit clients can be deductible when properly documented, but to prevent personal use of company funds, fuel expenses within your country are excluded. Public transportation tickets or receipts that do not contain the company’s legal details are not accepted as company invoices. For small travel expenses where obtaining an invoice in the company’s name is not reasonably possible, such as certain public transport tickets, these costs may instead be covered through the Daily Allowance, where applicable, provided that the Business Trip has been properly registered and the Daily Allowance has been requested and approved.
• Food, meals, drinks, lunch expenses.
• Vacations and pleasure trips, obviously. And also be careful if you decide to “visit a client” from December 24 to 26, for example.
• Permanent office (more than 6 months a year). This is to prevent your home country (or any other country) from considering your company tax resident there. You are not allowed to have an office or premises for more than 6 months of the year.
• Expenses that imply a permanent establishment in a country, especially outside of Estonia. Examples include: internet connection for a house, apartment, or wifi, water, electricity, or other utility bills, a car, or car leases for more than 6 months. Remember, Companio supports online, location-independent activities.
• e-Residency application or renewing fee.

The deductible expenses of your company (that is, that makes sense given the activity of your company) are tax-free because they are money that is reinvested in the company. However, to be able to deduct them for accounting purposes, they must comply with a series of rules:

• There must be a justification. For example, for Airbnb accommodation, you have to prove that you are going to work with a startup, visit a client, attend a conference, or study culture for your blog if it is your main source of income.
• You must have documentary support, that is, an invoice or contract that justifies it. If it is an AirBnB accommodation, for example, a rental contract in the name of the company. In the case of an invoice, it must have the name of your company, registration number, registered office, and VAT or VAT number (if you have one).
• They are paid with the company card, or with your bank account. As an exception, you can pay with your personal accounts (such as out-of-pocket expenses) if you cannot pay with your corporate accounts or cards.
• Avoid paying for any non-deductible expenses (such as food, a pair of jeans, or a vacation trip) with your corporate accounts or cards. If you do, you will need to either refund the amount back to the company from your personal funds, or the expense will be treated as a non-business expense and taxed accordingly under Estonian law.

Can I deduct a meal with a client as a business expense?

No, expenses related to food, meals, or drinks are not considered deductible, even if they occur during a meeting with a client or supplier.

Updated on: 14/08/2026