Responding to the potential business impacts of COVID-19

A special COVID-19 webpage managed by PwC experts. This page provides information on how you can prepare your organisation and respond.

PwC Estonia has set up a special COVID-19 expert team to help our clients find solutions in the time of crisis. On this page, you will find topical materials and an overview of key issues which we will help our clients address and which are related to the spreading of the virus and the state of emergency.

Estonia is one of the few countries in the world where most public services are electronically accessible. Even though the crisis is a challenging situation for us all, it is still possible to continue most of the business activities, as they depend on the accessibility of public services. 

As a global network of firms, we can make use of the best practices of our Asian and European colleagues who have developed crisis plans for a range of issues from the business and financial consultations to operative and technical solutions. PwC’s tax and financial consultants and PwC Legal’s lawyers will give you a comprehensive overview of all relevant issues, to allow you to systemically navigate all your activities in these difficult times.

PwC’s specialists can help you in various roles and with a range of tasks – they can help your management think of potential options and provide operational advice, assist you in project management during the crisis, help you develop and rapidly implement solutions for specific problems, arrange secondment of human resources to perform the activities within your organisation, and do much more.

Our global crisis centre is currently working with a range of organisations across industries.

Six key areas of focus for organisations

Crisis management and response

Existing business continuity plans may not be capable of handling the fast-moving and unknown variables of an outbreak like COVID-19. 

What you can do now: 

  • Develop incident management and scenario plans that are specific to this crisis

  • Focus on factually and effectively communicating to stakeholders

  • Plan on how to meet government priorities in individual countries and minimise the risk of business disruptions

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Beyond human welfare, there are other people challenges to tackle, including how to support remote working at scale.

What you can do now: 

  • Attend to immediate global mobility concerns, such as reviewing travel rules, HR policies, first-aid plans

  • Assess remote working strategy, including asking employees to temporarily stop work or work remotely or relocate

  • Address strains on a firm’s existing information technology and communications infrastructure in order to support remote working during the crisis

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Operations and supply chain

The ripple effects of the COVID-19 pandemic are difficult to model and assess, but global businesses can begin to mitigate supply chain distributions. 

What you can do now: 

  • Identify alternative supply chain scenarios — especially as new cases of the virus emerge in different territories

  • Activate pre-approved parts or raw-material substitutions

  • Adapt allocations to customers and pricing strategies

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Finance and liquidity

Financial markets often watch how companies plan for and respond to events like the COVID-19 pandemic.

What you can do now: 

  • Consider disclosures related to direct effects on the results of operations, as well as second- and third-order effects

  • Think about disclosures related to risks and uncertainties about the impact of COVID-19 on future periods

  • Assess disclosures on the current and future impact on liquidity and capital resources

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Tax, trade and regulatory

Navigating complexity and risk in today’s global uncertainty takes more than an understanding of tax and regulatory systems. It is critical that tax functions consider the broader economic, political and societal context you operate in, in order to make informed and compliant decisions that drive your operations forward.

What you can do now: 

  • Effectively manage cash taxes, obtain available refunds and consider local government and tax authority measures in response to COVID-19

  • Consider actions to stabilise supply chains while bracing for an unpredictable revenue and profitability mix in key markets

  • Assess the resources your company needs to meet your ongoing indirect and direct tax compliance requirements

  • Explore opportunities focused on becoming more flexible in responding to arising uncertainties

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Strategy and brand

As companies move from reacting to mitigating the impact of the outbreak, strategies to emerge stronger may come in focus.

What you can do now: 

  • Consider accelerating digital transformations as the shift to remote working reveals gaps in IT infrastructure, workforce planning and digital upskilling

  • Protect growth and profitability through actions such as scenario planning, more frequent financial modeling exercises to improve resiliency, and new models that incorporate economic impacts of past pandemics

  • Take the pulse of your customers, thinking through longer-term considerations around shifts in core markets or business models as a result of the pandemic

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Our team is continuously updating the content and adding new information to this webpage to keep all the information in correlation with the evolving crisis plan of our government.


What will happen if tax declarations are not submitted or taxes due are not paid by due dates?
How can one defer taxes?
Is it possible to reduce one’s tax burden?
In case of payment failures, is interest payable and to what extent; can that extent be reduced?
Can compensating costs to those working from their homes lead to (additional) tax liability?
Is it possible that the salaries of those who used to do cross-border work will now be taxed differently; if so, how?
Is it important to still honour the minimum obligation to pay social tax and why?

The tax authority has gathered important information on the state of emergency, please see its webpage for further details.

NB! The calculation of interest on tax arrears will be suspended during the state of emergency

In order to mitigate the financial problems of companies, the Tax and Customs Board will suspend the calculation of interest on tax arrears of companies. The suspension will apply retroactively from 01 March and will be in force until 01 May. However, all declarations must be submitted by the required deadlines and all persons who are capable to pay their taxes by due dates should do so.

Please see for more information:

  • Declare and pay your taxes by due dates – owing taxes is expensive because in addition to the main debt you must also pay interest in the amount of 0.06% per each delayed day. Furthermore, the interest payable is subject to income tax.
  • In case of payment failures, the person liable to pay taxes can submit to the tax authority a reasoned request to pay tax arrears in instalments and ask for a deferral of such tax obligations that are not yet due. For a more efficient management of cash flows during the state of emergency, one may consider whether they should ask for the possibility to pay tax arrears in instalments. In general, the tax authority takes a reasoned decision within 20 days. Currently, it is however possible to request for the payment of taxes in instalments in a simplified proceeding. Please see the webpage of the tax authority for more information. While requesting the possibility to pay taxes in instalments, it is possible to apply for the reduction of the interest on taxes (0.06% per day) by 50% (this will be automatically granted in the simplified proceeding).
    PwC’s tax department can help you in preparing and drawing up your reasoned request and timeline and communicating with the tax authority.
  • The basis for changing one’s residence for tax purposes and the issue of taxing the income from employment in a situation where a person is unexpectedly quarantined in a country which is not their actual place of work, may cause problems if the person must remain in the quarantine for a lengthy period (6 months).
    PwC’s tax department can help you in mapping the situation and finding red flags (the basis for changing the residence for tax purposes and taxing the income) in communicating with the tax authority.
  • Incurring costs due to teleworking. A cost is business related if it is incurred with the objective to earn taxable business income or if incurring such a cost is necessary or suitable for maintaining or developing taxable business activities and if incurring such a cost for business purposes is clearly justified. During the state of emergency, costs incurred to maintain and develop one’s business activities may somewhat differ from costs incurred under normal circumstances.
    PwC’s tax department can help you in mapping your costs, providing an assessment on whether specific costs are related to business activities, and communicating with the tax authorities.
On 15 April 2020 Estonian Parliament approved Supplementary Budget Act that stipulates measures to mitigate the effect of the spreading of corona virus that causes COVID-19. These measures include the following tax measures:

Personal protective equipment and other medical equipment shall be exempted from the customs duty and VAT

Personal protective equipment and other medical equipment used to prevent and stop the spreading of COVID-19 virus shall be exempted from the customs duty and VAT

The measure applies to such personal protective equipment that is imported by or in the name of national authorities and public sector bodies for free distribution or self-use. Neither the legislation of the European Union or Estonia provides an exhaustive list of goods to which the duty and tax exemption applies but there is an indicative list used by Estonia in granting the new exemptions. Duty exemption is not automatic but is granted by a decision of the Tax and Customs Board upon the submission of the customs declaration. The initial period for tax and duty exemption is from 30 January 2020 to 31 July 2020.

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The list of goods and services to which a reduced rate of VAT (9%) applies will be extended

The aim of this amendment is to extend the reduced VAT rate (9%) applicable to hard-copy publications to publications on other physical media and to electronic publications (books, academic literature, press publications), which are presently subject to the VAT rate of 20%. Publications on physical media other than hard-copy publications are audiobooks that are stored on a CD or other physical medium and that include the same textual information as a hard-copy or electronic book. The amendment aims to put the tax treatment of hard-copy publications and publications on other physical media and electronic publications on an equal footing. VAT Act will be amended as of 01 May 2020.

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The employers will not have to pay at least the minimum amount of social tax on all salaries

Employers will not have to meet the obligation to pay at least the minimum amount of social tax per employee on salaries paid in March, April and May 2020. There is an obligation to declare and pay social tax on remuneration that was actually paid to the given employee. Employees will not lose their right to medical insurance due to this exemption. 

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Persons with a contract concluded under the law of obligations

Persons with a contract concluded under the law of obligations, i.e. not an employment contract, will not lose their medical insurance

Medical insurance for the insured persons that work on the basis of a contract concluded under the law of obligations will not lose their medical insurance from the 10th day of the second month following the month in which the state of emergency ends even if the minimum obligation to pay social tax is not met during the state of emergency. There is an obligation to declare and pay social tax on remuneration that was actually paid to the person.

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Sole proprietors payments

The state will fund the advance payments of social tax for sole proprietors in the first quarter and the sole proprietors will be exempted from the obligation to pay social tax on the monthly rate for the spouse participating in the activity of the sole proprietor’s enterprise.

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Mitigating measures in relation to tax interest

Calculation and payment of tax interest will be suspended from 01 March 2020 until the end of the state of emergency.

The rate of the general tax interest will be reduced from 0.06% to 0.03% per day from the end of the state of emergency until 31 December 2021.

The tax authority shall have the right to reduce the interest on a deferred tax liability by up to 100% during the period of 01 May 2020 to 31 December 2021.

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A supplementary income tax exemption on donations and gifts

If a legal person makes a donation or a gift for charitable purposes to an agency of an Estonian state body or a local government body or a social welfare institution or to an owner of an Estonia-based hospital during the period of 12 March 2020 to 01 July 2020, such a donation or gift shall not be subject to income tax. 

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Excise duties will be temporarily reduced

Temporary rates of excise duty shall apply for the period of 01 May 2020 to 30 April 2022. It is presumed that lowering the rate of excise duty will decrease the price of diesel fuels by 4 euro cents per litre, the price of light fuel oil by 14.5 euro cents per litre, and the price of natural gas with VAT will thus be reduced for consumers by nearly 47 euros per 1000 m3. Lowering the electricity duty to 1 euro per MWh results in a 3.1% reduction in the electricity price.

Please see more for information on temporary rates of excise duties.

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The state will suspend its payments (4%) into the second pillar pension scheme

The state will suspend state-funded payments into the second pillar pension fund of employees for the period of 01 July 2020 to 31 August 2021. An exception will be made for those who were born in the years 1942–1960: the state will continue to make payments into the accounts of those persons.

Starting from October 2020, employees will be entitled to submit applications to suspend their own payments (2%) into the second pillar pension fund for the period of 01 December 2020 to 31 August 2021. The state will compensate for the suspended state-funded payments by making supplementary payments into the second pillar pension scheme in the years 2023-2024.

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Hannes Lentsius

Tax Service Line Leader, PwC Estonia

+372 5691 1698


Kristiina Stokkeby

Tax Senior Consultant, PwC Estonia

+372 614 1800


Priit Lätt

Partner / Head of IP/IT, tax disputes and public procurement, PwC Legal

+372 511 9628


Employment relations
  • How to reduce the amount of work on a temporary or a permanent basis? 
  • What are the special rules for redundancy or forced leaves during the crisis?
  • Is it necessary to conclude temporary agreements for reducing pay and amount of work?
  • Is it necessary to prepare for layoffs? Collective layoffs?
  • Is the reduction of the amount of work temporary? Forced leave for up to 3 months?
  • Is it necessary to temporarily recruit more people (the commercial sector)?
  • For which jobs will teleworking be possible?
  • What to do in a situation where a critical number of employees cannot or are no longer allowed to come to the workplace?
  • Which jobs are of key importance for the organisation and which jobs will be sacrificed first, if this proves to be necessary?
  • Which employees does the organisation need in short and medium term?

The Estonian Unemployment Insurance Fund has approved measures to help employers maintain jobs by the state’s support in paying salaries. Support will be given to employers who meet at least two criteria out of three:

  • their turnover or income has dropped by a minimum of 30 per cent as compared to the same period last year;
  • they are unable to provide work for at least 30 per cent of their workforce due to the spreading of the Covid-19 corona virus;
  • or they have reduced the pay of at least 30 per cent of their workforce by 30 per cent.

The Estonian Unemployment Insurance Fund will compensate employees 70 per cent of their average gross salary of the last 12 months, but the sum shall not exceed 1000 euros. Employers must also contribute by paying an additional sum of at least 150 euros.

The measure shall be in force in March, April and May and an employer may benefit from the measure for two months during this period. It is also important to note that the measure is applied retroactively, i.e. it can be used to help those who have already been made redundant due to the crisis.

Indrek Ergma

Specialist Counsel / Attorney-at-Law Head of Corporate and Employment, PwC Legal

+372 529 4580


Maris Alt

Associate, PwC Legal

+372 509 8203


Erki Mägi

Advisory Director, PwC Estonia

+372 5625 6340



Is non-performance of a contract permissible if it occurs due to force majeure? 
What are the rights of the contractual party to whom the contract is not performed because of force majeure? 
Can one delay payment for the already delivered goods due to force majeure?

  • If a contractual obligation cannot be performed due to force majeure, it is possible that such non-performance is excusable. You need to check whether your contract contains a definition of force majeure and what this definition is.
  • You need to immediately inform the other party to the contract of the force majeure event (an export prohibition, delivery problems, suspended production) that prevents you from performing your obligations and its impact on the performance of the obligation.
  • Please note that the occurrence of force majeure primarily prevents one from claiming for damages and penalties for late payment and a contractual penalty if the right to claim a contractual penalty was agreed upon in the contract. The party that has not violated the contract shall still be entitled to withhold performance of their own obligation, withdraw from the contract or cancel the contract and reduce the price. However, even in the case of force majeure, a party may only terminate the contract if the breach of the non-performing party caused by force majeure is a material one. In order to withdraw from a contract or cancel a contract, one must make a declaration to the other party.
  • Please note that non-performance of an obligation is excusable only for the duration of the period during which performance was prevented by force majeure. Before the force majeure event occurred and after it has ended, you still must perform the contract, unless this is impossible due to the nature of the contract (e.g. the contractual obligation was to deliver goods on a specific date/for a specific event). It is therefore possible that the contractor is not released from the liability for delayed completion of the works, if the completion was delayed already before the force majeure event occurred and the contractor had failed to order materials by the required deadlines while the export prohibition was not yet in place.
  • Non-performing a monetary obligation is not excused by the occurrence of force majeure. Upon incurring financial difficulties, it is therefore necessary to start negotiations with the other contractual party as early as possible for drawing up a payment plan or agreeing on new payment deadlines. It is also possible that due to the state of emergency, the balance of the parties’ contractual obligations changes, especially if closing one’s business is not a voluntary decision, but a duty prescribed by the state. For example, cinemas, entertainment facilities, sports clubs and spas do not need daily maintenance and cleaning services while they are closed, and during the closure, those businesses are unable to earn income. Paying for the afore-mentioned services is therefore now much more complicated or financially burdensome for them. In such a case, the primary claim of the injured party is to modify the contract in a manner that restores the original balance of the parties’ obligations. If modifying the contract is not possible or reasonable, the injured party has a right to terminate the contract.

Indrek Ergma

Specialist Counsel / Attorney-at-Law Head of Corporate and Employment, PwC Legal

+372 529 4580


Karin Marosov

Specialist Counsel / Attorney-at-Law Head of Real Estate, Commercial and Trade, PwC Legal

+372 518 9852


Rutt Värk

Head of M&A, PwC Legal

+372 523 3800


Organising our work

  • PwC is making every effort to protect the health of both our employees and clients in the situation where the virus is spreading, and to help you solve major challenges that you face in this difficult business situation.
  • As a responsible company we take the risk of the COVID-19 virus spreading extremely seriously and given the rapid spreading of the virus we have decided that all our employees work from their homes as of 16.03.2020.
  • All our meetings and trainings are conducted via e-solutions and we continue our usual work.
  • We have provided our employees with convenient teleworking options and we will do our utmost to guarantee that all our work processes will be seamless and without delays even though they are performed remotely.
  • Given that this is a crisis, we are ready and willing to solve our clients’ problems also outside our regular business hours – please do not hesitate to call or write us and we will find a way to help you.

ADDITIONAL INFORMATION on the spreading of the COVID-19 virus in Estonia

Our experts in media

We could not have expected this but there is no more work – what to do with the employees?

The corona crisis may result in a situation where a company is no longer able to give its employees the agreed amount of work. Indrek Ergma and Maris Alt, Attorneys-at-Law at PwC Legal, explain what employers should do if such a problem arises.

Contact us

Viljar Kähari

Managing Partner / Head of Banking & Finance, Estonia, PwC Legal

+372 508 4777


Kadri Lindpere

Marketing and Communication Leader, Pärnu mnt 15, 10141 Tallinn, PwC Estonia

+372 505 1239


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