Pursuant to subsection 1 of § 48 of the Income Tax Act, employers pay income tax on fringe benefits granted to employees.
Based on clause 7 of subsection 1 of § 2 of the Social Tax Act, social tax is paid on fringe benefits within the meaning of the Income Tax Act, expressed in monetary terms, and on income tax payable on fringe benefits.
Declaration
The period of taxation of fringe benefits is one calendar month. The employer declares the fringe benefits granted to employees and income and social tax calculated on fringe benefits during a calendar month in Annex 4 of the form TSD, which must be submitted together with the form TSD to the Estonian Tax and Customs Board by the 10th day of the month following the calendar month in which the fringe benefit was granted. The tax amount is paid to the bank account of the Tax and Customs Board by the same date at the latest.
Legal basis
Handbook “Fringe benefits”
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Conditions of share options
Important conditions of share options are:
- the time of granting the option, i.e. the date of signing the share option contract or the date of agreeing on the terms of the employer's participation program (e.g. employee stock purchase plan, ESPP or restricted stock unit, RSU);
- the underlying asset of the option, i.e. holding (share) in the employer or in a company belonging to the same group as the employer;
- the number of underlying assets, i.e. the specified number of shares / nominal value of the share;
- the exercise (realisation) price of the option, i.e. specified share price / share value;
- the term of option exercise (realisation), i.e. the period from the granting of the option to its exercise, in taxation, the duration of the period of at least 3 years is important;
- the moment of exercise (realisation) of the option, i.e. the date when the employee uses the right to acquire a holding arising from the option and receives underlying assets in exchange for the option;
- the option premium, i.e. the amount paid by the employee for the option. Option premiums are not mandatory.
If the option contract has not been digitally signed or notarised, the employer is obliged to submit the contract or information regarding joining the employer's participation program to the Estonian Tax and Customs Board at the e-mail address [email protected] within 5 working days of its conclusion.
Last updated on 08.01.2025
Last updated: 05.11.2025