Taxation, Uneployment and Pensions in Estonia

Working in Europe | Taxation/salaries, Unemployment | Estonia

Taxation

This is a general overview about the Estonian tax system. For further details please follow links to original information provided in the text.

Direct taxes are withheld from the salary automatically by the employer. Direct taxes are income tax, unemployment insurance and the funded pension payment.

Income tax

As of January 2018 the tax-free amount (basic exemption) of 500 euros per month (or 6000 euros per year) will be applied on all types of income.

  • annual income up to 14 400 euros gives 6000 euros as annual (500 euros monthly) basic exemption
  • if annual income is between 14 400 euros and 25 200 euros, basic exemption decreases according to the following formula: 6000 – 6000 ÷ 10 800 × (income amount – 14 400)
  • if annual income is above 25 200 euros, basic exemption is 0.

Salary/Wage and Tax Calculator www.kalkulaator.ee/en/salary-calculator

 

Unemployment insurance

A monthly unemployment insurance tax of 1,6% is deducted from your salary by your employer.

Funded pension payment

A funded pension payment is withheld from your salary at a rate of 2%, if you have joined the optional funded pension system. You can read more about it in the Pensions section.

Social tax

Social tax is paid by employers at a rate of 33% on all payments made to employees for salaried work performed. Social tax is not part of the salary number; it is calculated on the basis of the agreed (gross) salary. 13% of the social tax goes to the Health Insurance Fund and 20% goes to pension insurance.

There is an extra 0,8% unemployment insurance payed by the employer, not included in the salary number.

Other taxes

The most important of the indirect taxes is the value-added tax (VAT), which is 20% (from 1 July 2009) for most goods. The VAT for some goods, such as books, medicines etc., is 9%. There are also more indirect taxes for gambling, tobacco products and alcohol.

 

Income tax return

The most convenient way to file your income tax return is by electronic submission through the e-Tax Board, where pre-filled forms are available. Enter with your ID-card credentials, mobile ID or via Internet bank (most banks in Estonia provide this possibility).

Filling in the income tax return: the fields of the tax return must be filled in Estonian irrespective of the language of environment (Estonian, Russian or English).

Information on the status of the income tax return appears on your personal income tax return information page.

Contact an Estonian EURAXESS Services Centre for assistance with the income tax return forms.

 

Income tax returns must be presented by Estonian residents. An Estonian resident is someone whose permanent residence is in Estonia or who stayed in Estonia for 183 days or more during one year.

There is a Form R which shall be submitted to the Estonian Tax and Customs Board for informing about changes in the natural persons residency (e.g. if you will become an Estonian resident for tax purposes upon arrival). If you leave or arrive in Estonia, we suggest you to ask help from the tax administration, in order to decide if your residency has changed (for tax purposes).

 

A non-resident is obliged to submit a tax return if he/she has received taxable income that is subject to taxation in Estonia, but on which no income tax has been withheld upon payment.

Estonian residents must also declare the income that they have received abroad.

If an Estonian resident stayed abroad for work more than 183 days in 12 consecutive months and taxes were paid from the income abroad, no additional income tax has to be paid in Estonia, and the income must be declared as tax free income from abroad.

If an Estonian resident stayed abroad for work less than 183 days, income tax has to be paid on the salary received abroad as well. Taxes paid abroad are taken into account, so no double taxation occurs. If the income tax in the other country is smaller than in Estonia, the difference in the income taxes must be paid in Estonia. If the income tax in the other country is higher than in Estonia, no refunds are paid for the difference in the taxation rates.

 

 
 

 

 

by Tõnu Runnel_visitestonia.ee

Unemployment

Unemployment insurance benefits are paid to legal residents of the EU. To receive an unemployment insurance benefit, unemployment insurance contributions must have been paid for at least 12 months of the previous 36 months. Read more...

 

 

Anete_Palmik_visitestonia.ee

Pensions

Estonia contributes to pensions of foreigners for the time worked in Estonia.The retirement age in Estonia is currently 63 years for men and women. Read more...

 

 

See also:

Estonian Tax and Customs Board - Information for private client

Estonian Tax and Customs Board - Amount of tax-free income beginning from 1 January 2018

Estonian Tax and Customs Board - Submission of income tax returns for 2017

Estonian Tax and Customs Board - Income tax information for employees

Estonian Tax and Customs Board - Conventions for the avoidance of double taxation and the prevention of fiscal evasion with respect to taxes on income and capital

Estonian Tax and Customs Board - How to get refund of income tax to non-resident natural persons in Estonia

Estonian Tax and Customs Board - Taxation of income of non-residents

Estonian Tax and Customs Board - Tax return forms

Estonian Tax and Customs Board - Tax rates

www.kalkulaator.ee/en/salary-calculator Salary/Wage and Tax Calculator

Work in Estonia - Taxation obligations

Last updated in January 2018