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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Personal car is used for transport
If the employee is reimbursed for the costs of traveling to work by personal car, because it is not possible to reach the workplace from their place of residence using public transport by the start of the working day, the rules for reimbursement of the costs of using a personal car must be followed, i.e. records must be kept of rides related to work duties (including rides to/from work), if it is desired to reimburse up to 550 euros exempt from tax in a calendar month.
The cost reimbursement procedure does not require submitting cost documents to employer to prove actual costs.
In addition to the compensation, additional compensation for gasoline costs is not provided for the employee when driving to work in a personal car, and in such a case these costs are considered a fringe benefit.
However, it is possible to reimburse parking fees exempt from tax if the parking was related to the performance of work duties.
Last updated on 08.01.2025
Last updated: 05.11.2025