Social Tax in Estonia

What is social tax?

Social tax in Estonia is used to finance state pension insurance and public healthcare. It is paid by employers and, in some cases, the Estonian state.

Who must pay social tax?

• Employers – on employee salaries and fringe benefits
• Sole proprietors (FIEs) – on business income
• The Estonian state – in certain situations, such as for caregivers or persons with reduced working capacity

Social tax for employers

Social tax rate and calculation

• Rate: 33% of the employee’s gross salary
  E.g. if the gross salary is €1,000, the employer pays €330 in social tax
• Minimum base (2025): €820 per month
  Therefore, the minimum monthly tax is €270.60, even if actual pay is lower

Declaration and payment deadlines

• Tax period: calendar month
• Deadline: by the 10th day of the following month
• Submit the TSD form via the e-MTA portal or contact a regional tax centre

Social tax compensation for employees with reduced capacity

If an employer hires an employee with at least 40% incapacity for work, they may receive a social tax incentive through the Unemployment Insurance Fund.

How it works:

• The state pays social tax on the minimum monthly base
• The employer pays social tax only on the portion exceeding €820
• If the employee earns less than €820 (e.g. part-time), the state still pays the full base amount

This only applies when the employment is based on a labour contract — not for service agreements or freelance contracts

Social tax for sole proprietors (FIEs)

• Rate: 33% of net business income
• Tax period: calendar year
• Paid in advance quarterly payments, by the 15th of each quarter

After the year ends:

• The Tax and Customs Board may require an additional payment if income was higher
• Overpaid tax is refunded by 1 October of the following year