Social tax

The taxable period for social tax on the business income of a self-employed person is one calendar year because the taxable business income is determined on the basis of the income tax return of a natural person once a year.

During a calendar year, a self-employed person is, as a general rule, required to pay advance payments of social tax on a quarterly basis.

• Advance payments are calculated on a quarterly basis. The monthly rate of social tax, which is the basis for calculating advance payments, is 820 euros in 2025.
  The quarterly obligation to make advance payments of social tax is 811.80 euros (820 × 3 × 33%), if there are no circumstances reducing the tax liability, i.e. if the advance payments are calculated for the whole quarter.
• A self-employed person is exempt from the obligation to make advance payments of social tax if, during the whole quarter, the self-employed person (clause 1 of subsection 3 of § 9 of the Social Tax Act):

• has received state pension or has been a person with partial or no work ability;

• is an insured person in accordance with clause clause 5 of subsection 4 of § 5 of the Health Insurance Act:

• persons acquiring basic or general secondary education;
• persons acquiring formal vocational education;
• and higher education students who are permanent residents of Estonia and study in an educational institution in Estonia founded and operating on the basis of legislation or in an equivalent educational institution abroad, except for doctoral candidates that receive the doctoral allowance.

The form of study and age do not play a role in students’ insurance. Regardless of age, a permanent resident of Estonia taking part in daytime or distance learning has the right to be insured if the permanent resident has been admitted to a university study programme (matriculated) and has the status of a student.

An external student, for example, is not entitled to health insurance because external students are not matriculated and do not have student status. Also, a student at an open university does not receive insurance because open university students study on the basis of modules of the formal education curriculum or course programmes of individual subjects. They do not have student status either.

Person’s health insurance data can be found in the eesti.ee portal under the page “Health Insurance”. If necessary, the certificate can be saved as a PDF document or sent by e-mail to the desired address.

The insurance will take effect on the day when the Health Insurance Fund receives the data on the commencement of studies (usually from the Ministry of Education and Research). The Estonian Tax and Customs Board receives student data from the Health Insurance Fund.

Note: self-employed persons under 19 years of age are exempt from the obligation to make advance payments of social tax regardless of their student status.

Self-employed persons studying and self-employed persons who receive pension are exempt from the obligation to pay advance social tax payments during the year and from the minimum annual social tax obligation based on the income tax return. However, they are required to pay social tax once a year on the actual business profit declared in the income tax return of a natural person (33% tax rate).

• Proportional calculation of the quarterly advance payments of social tax if the tax liability arises within a period shorter than a quarter (subsections 5 and 5¹ of § 9 of the Social Tax Act).

If the conditions for exemption from the obligation to make advance payments are met not during the whole quarter, but only during a certain period of the quarter, proportion to the number of days is applied.

A self-employed person pays social tax in proportion to:

• the number of days of registration as a self-employed person in case the self-employed person has been entered in the commercial register or deleted from the commercial register during the quarter;
• the number of days of business activities in case the self-employed person has notified the registrar of the commercial register of the suspension of the activities or the starting date and final date of the temporary or seasonal activity;
• the number of days preceding the time of becoming a person receiving state pension or a person with partial or no work ability in case the self-employed person has become a person receiving state pension or a person with partial or no work ability during the taxable quarter; and the number of days following the termination of such status in case the right of the self-employed person to receive a state pension or the status of a person with partial or no work ability has terminated during the quarter;
• the number of days preceding the creation of the status of a person considered equal to an insured person in accordance with clause 5 of subsection 4 of § 5 of the Health Insurance Act in case the right of the self-employed person to be a person considered equal in accordance with clause 5 of subsection 4 of § 5 of the Health Insurance Act has been created during the quarter; and the number of days following the termination of the status of a person considered equal to an insured person in case the right of the self-employed person to be a person considered equal in accordance with clause 5 of subsection 4 of § 5 of the Health Insurance Act has terminated during the quarter;
• the number of days of non-validity of the A1 certificate issued by the competent foreign social security institution.

If a person must pay tax for parts of a quarter, then:

• the number of days for which the tax liability arose is calculated (all days not covered by the exemption are added together);
• the actual number of days in a given quarter is determined;
• daily payment is calculated: quarterly payment ÷ number of days per quarter × number of days of tax liability.

Each quarter has a different number of days:
Q1: 31 + 28 + 31 = 90 days
Q2: 30 + 31 + 30 = 91 days
Q3: 31 + 31 + 31 = 92 days
Q4: 31 + 30 + 31 = 92 days

For example, if the tax liability arose for 50 days and there are 91 days in a given quarter, the tax liability is calculated as follows: 811.80 euros ÷ 91 × 50 = 446.04 euros.

Examples

The following are examples of the calculation of daily advance payments in the first quarter of 2025 (number of days = number of days of tax liability in a quarter):

1. self-employment from 1 January 2025 (or earlier) to 31 January 2025 → number of days = 31 → Q1 payment: 811.80 euros ÷ 90 days × 31 days = 279.62 euros
2. self-employment from 1 Janary 2025 to 28 February 2025 → number of days = 29 → Q1 payment: 811.80 euros ÷ 90 × 29 = 261.58 euros
3. self-employment from 1 January 2025 (or earlier), suspension of activities from 10 January 2025 to 5 February 2025 (27 days) and student status from 10 February to 5 march 2024 (24 days), self-employment not ended → number of days = 90 days in a quarter – 27 days of suspension – 24 days of student status = 39 → Q1 payment: 811.80 euros ÷ 90 × 39 = 351.78 euros

• Taking into account the social tax paid by employer as reduction of advance payments of self-employed persons (subsection 4 of § 9 of the Social Tax Act):

If social tax for a self-employed person is also paid by an employer or, in accordance with § 6 of the Social Tax Act, the state, city or rural municipality, the amount of advance payments by the self-employed person may be less than the amount of tax calculated on the basis of triple the monthly rate, in case the total amount of social tax payable for the self-employed person by the employer or, in accordance with § 6 of the Social Tax Act, by the state, city or rural municipality, and the total amount of social tax payable as advance payments by the self-employed person during the taxable period is equal to the amount of tax calculated on triple the monthly rate. The social tax payable by the employer or by the state, city or rural municipality pursuant to § 6 of the Social Tax Act is calculated in total as of the beginning of the calendar year.

Social tax declared in the tax return forms TSD or ESD by an employer or, in accordance with § 6 of the Social Tax Act, the state, local government or an artistic association, will be taken into account in total as of the beginning of the calendar year (subsection 4 of § 9 of the Social Tax Act).

The quarterly advance payments of social tax (full amount or calculated in proportion) are reduced by the amount of social tax declared in the tax return forms TSD or ESD. The data of the TSD or ESD is taken into account with a periodic shift in relation to the quarter (–1 month) (i.e. as at 17 March 2025 for the calculation of the payment for the first quarter, the TSD or ESD declaration for December 2024, January and February 2025 is taken into account). If the amount of social tax in the tax return form TSD or ESD for the relevant period is larger than the advance payment for the given quarter, the “unused” social tax paid by employer in the given quarter will be transferred for the reduction of the payments of the following quarter(s), but not retroactively for the reduction of the tax liability of previous quarters. The advance payments arising in the quarters preceding the month in which the income from employment is received will not be recalculated on an ongoing basis. Overpayments that have arisen in previous quarters on the basis of the obligation to make advance payments are refunded pursuant to the general procedure on the basis of the income tax return of a natural person in 2025.

Examples

Similarly to the social tax paid by an employer, the amounts received to cover social tax from a person's entrepreneur account in 2025 are also taken into account if the self-employed person has such an account.

It is important that the self-employed persons themselves monitor the amounts of advance payments of social tax and pay them on time.

Interest of 0.06 per cent per day must be paid on the amount of advance payments of social tax not paid by the due date. The Estonian Tax and Customs Board calculates the amount of social tax payable for a quarter on the basis of the information known at the time of generating the advance payment on the night preceding the due date (the amount of advance payment of social tax of a self-employed person is affected by, for example, suspension of business activities, becoming a pensioner or student, social tax paid by an employer or the state, etc.). If self-employed persons have not calculated the amount of advance payment of social tax themselves, they can find the amount in the e-services environment e-MTA or go to a service bureau of the ETCB on the due date for the payment (on the 15th day of the last month of each quarter).

Regulation No 883/2004 of the European Parliament and of the Council on the coordination of social security systems and its implementing regulation 987/2009 apply in Estonia. Title II of Regulation No 883/2004 determines which Member State’s legislation to apply in the case of an employee’s movement within the EU or in the case where an employer’s registered place of business is situated in a Member State other than the place of employment of the person.

The competence of the Estonian Tax and Customs Board in the application of EU regulations

• Collection of social security charges and contributions In the case of Estonia, these are social tax, unemployment insurance premium and, in the case of Estonian residents, contributions to mandatory funded pension (II pillar).
• Exchange of data between Member States on matters of social security contributions.
• Recovery of tax debts at the request of the competent authorities of other Member States and submission of such requests to other Member States.

EU rules require that only one state’s laws apply to every person at a time. From the point of view of taxation, this means that the remuneration received in different Member States is taxed in only one Member State. As a general rule, social security charges and contributions are paid to the country where the work is carried out.

Exceptions to this general rule are introduced for persons working in several countries and for posted workers. In this case, the social security contributions are paid in the country (so-called ‘Member State of affiliation’) where a competent social security institution has issued an A1 certificate (“Certificate concerning the social security legislation which applies to the holder”) at the request of a person or an employer. The competent institution in Estonia for determining the Member State of affiliation and issuing the A1 certificate is the Social Insurance Board.

If the Social Insurance Board has issued the A1 certificate to a person, this means that the Estonian Social Tax Act is implemented. If the A1 certificate has been issued in another Member State, there will be no social tax liability in Estonia and the employee’s social security contributions must be paid according to the rules of that Member State.

Social tax liability of foreign employers in Estonia

If an employer of a foreign country becomes liable to social tax in Estonia, the employer has the possibility to authorise the employee to fulfil the tax obligations arising in Estonia on behalf of the employer (article 21 of Implementing Regulation 987/2009).

Based on the above, please note that depending on the specific situation, an Estonian employer who sends an employee to work abroad or employs a foreign employee in Estonia has to pay in Estonia both income and social tax or only income tax or only social tax on the salary paid to that employee.

If Estonia has concluded a social security agreement with a foreign country, then the social tax on the payments made to the resident of that country must be based on the agreement.

The table below sets out the list of persons for whom social tax is paid by the state, rural municipality or city, a legal person or a self-employed person on the basis of §§ 6 and 6¹ of the Social Tax Act.

The list of state authorities that calculate the social tax paid by the state, the rate of social tax and the tax base, as well as the codes of the tax return form ESD are also provided.

The payment and declaration of social tax paid by the state, rural municipality or city, legal person or self-employed person is regulated by subsections 1 and 1¹ of § 6 and § 6¹ of the Social Tax Act and Regulation No 113 of the Minister of Finance of 31 December 2003 "Procedures for payment of social tax in special cases".

The tax return form ESD has been established by Regulation No 60 of the Minister of Finance of 29 November 2010 (Annex 9). The tax return is uploaded in XML format or entered in the e-services environment e-MTA of the Estonian Tax and Customs Board. File structure

Support for creative activity

Under subsection 1² of § 6 of the Social Tax Act, an artistic association pays social tax for a creative person engaged in a liberal profession to whom the artistic association pays support for creative activity on the basis of §§ 18 and 19 of the Creative Persons and Artistic Associations Act.

An artistic association that pays support for creative activity to a freelance creative person calculates social tax and fills in the tax return form ESD.

An artistic association pays social tax for a creative person receiving support for creative activity on the monthly rate, which in 2026 is 886 euros. The taxable period is a calendar month.

If an artistic association has the obligation to pay social tax for a creative person for a whole month, the social tax on 886 euros is calculated at the tax rate of 33%, i.e. 292.38 euros, regardless of the amount of support for creative activity paid to the person. For the calendar month during which a person's right to receive support for creative activity commences or terminates, social tax must be paid in proportion to the number of calendar days for which the artistic association is required to pay social. The date on which the social tax obligation arises or expires must be indicated on the tax return ESD. For example, if a person receives the right to receive support for creative activity for 15 days from 17 March, social tax will be calculated as follows: 886 ÷ 31 × 15 × 33% = 141.47 euros (social tax is calculated in euro to the nearest cent).

If a creative person engaged in a liberal profession receives support for creative activity from multiple artistic associations (subsection 2 of § 18 of the Creative Persons and Artistic Associations Act), each artistic association pays social tax on the amount of the support for creative activity paid, in accordance with subsection 2⁵ of § 6 of the Social Tax Act.

If support for creative activity is paid by only one artistic association, that association pays social tax for the creative person on the monthly rate, in accordance with subsection 2 of § 6 of the Social Tax Act..

An artistic association must:

• calculate the social tax for freelance creative persons who receive support for creative activity each month,
• transfer it to the bank account of the Estonian Tax and Customs Board by the tenth day of the following month, and
• submit the relevant tax return (form ESD) to the Estonian Tax and Customs Board by the same date.

An artistic association is also required to issue a certificate concerning calculated social tax (form TSM) to a person for whom payment was made on the basis of subsection 12 of § 6 of the Social Tax Act, if the person requests it.

Fee for creative work

Employer does not have to comply with the obligation to pay minimum social tax (subsection 4 of § 2 of the Social Tax Act) if:

1. employee receives state pension;
2. employee has been determined to have partial or no work ability in accordance with the Work Ability Allowance Act;
3. employee is raising a child under three years of age or three or more children under the age of 19;
4. employee is a school or university student;
5. employee has been registered as unemployed for at least six months during the year before taking up employment;
6. employee is subject to reduced working time (7 to 17 years of age and educational staff);
7. employee is a member of a local government council;
8. employee is a crew member working on a vessel that meets the conditions specified in subsection 5 or 6 of § 13 of the Income Tax Act;
9. employee is a person receiving the allowance for spouse and registered partner in accordance with § 67 of the Foreign Service Act;
10. employee is on long-term sick leave (clause 1 of subsection 3 of § 2 of the Social Tax Act);
11. employee is away from work for a full month in the following cases (clause 1 of subsection 3 of § 2 of the Social Tax Act):

• employee takes leave (including maternity leave), except unpaid leave by agreement between parties;
• employee is temporarily incapacitated for work within the meaning of the Health Insurance Act;
• employee represents employees in the cases provided for by law or collective agreements;
• employee takes part in a strike;
• employee is in conscript service or alternative service or participates in reservist training.

It is permitted to work temporarily for up to eight calendar days per month during the period of registration as unemployed (so-called workbits). Employers must enter into an employment contract or a contract under the law of obligations (contract for services, authorisation agreement) with a person as usual, register the employment in the employment register, pay labour taxes (social tax, withheld income tax, unemployment insurance premium and mandatory funded pension payment) and declare the taxes on the tax return form TSD.

Employer's minimum social tax liability for temporary employment is the same as for ordinary employment.

The minimum social tax obligation may arise for an employer if the employer enters into a temporary employment contract up to eight days in duration with a person registered as unemployed and pays him or her a salary that is lower than the monthly rate of social tax in proportion to the number of days worked.

Examples

1. A person registered as unemployed works for eight days in September on the basis of a temporary employment contract and receives a salary of 320 euros. The basis amount of the minimum social tax obligation, i.e. the monthly rate of social tax per day, is 29.53 euros, i.e. 236.24 euros for 8 days (886 euros ÷ 30 days × 8 days; basis: subsection 3 of § 2 of the Social Tax Act), which is lower than the actual remuneration, so the employer calculates social tax on the actual remuneration, i.e. 33% of the 320 euros, i.e. 105.60 euros.
2. A person registered as unemployed works for eight days in September on the basis of a temporary employment contract and receives a salary of 150 euros. The actual salary is lower than the basis amount of the minimum social tax obligation of 86.24 euros, so the employer declares a minimum social tax obligation of 33% from 236.24 euros, i.e. 77.96 euros.

The minimum social tax obligation does not arise for an employer in the case of an employee or official with an employment contract if the conditions provided for in subsection 4 of § 2 of the Social Tax Act are met.

Section 5 provides, inter alia, that social tax is to be paid on actual remuneration within up to 12 months as of the commencement of employment, for an employee or official who during 12 months before the commencement of employment was registered as unemployed for at least six months in accordance with § 8 of the Labour Market Measures Act. If a person is registered as unemployed for less than 6 months, the tax incentive does not apply and the calculation of social tax is based on examples 1 or 2.

If an employee performs workbits on the basis of a contract under the law of obligations (contract for services, authorisation agreement), the employer will not have to perform the minimum social tax obligation, but the social tax will be paid on the actual payment. For example, if an employee receives a salary of 100 euros for a workbit, the employer declares a social tax of 33 euros (33%).

Additional information

As of 1 January 2026, the benefit for temporary incapacity for work paid by the Health Insurance Fund will be capped.

Example

An employee is on a standard sick leave for 30 days and the employer wishes to pay the employee compensation for the loss caused by the upper limit on the benefit for temporary incapacity for work.

To calculate the loss of benefit due to the upper limit of the benefit for temporary incapacity for work, it is necessary to find the employee's average remuneration per calendar day. The average remuneration per calendar day was calculated at 200 euros.

The difference between the average remuneration per calendar day and the upper limit of the benefit for temporary incapacity for work is calculated as follows.

1. Since the Health Insurance Fund pays a sickness benefit equal to 70% of an employee’s average remuneration per calendar day, the first step is to calculate 70% of the employee’s average remuneration per calendar day:

   200 eurost × 70% = 140 euros

2. Next, the difference between the Health Insurance Fund’s benefit and the upper limit of the benefit for temporary incapacity for work in 2026 is calculated:

   140 euros – 126.87 euros = 13.13 euros

   Days 9–30 of the sick leave total 22 calendar days.

3. The employer can compensate the employee, exempt from social tax, for the amount of benefit not received due to the upper limit, calculated as follows:

   22 calendar days × 13.13 euros = 288.86 euros

Thus, the employer can pay the employee 288.86 euros, exempt from social tax, as compensation for the loss caused by the upper limit on the benefit for temporary incapacity for work.

The employer declares the difference between the average remuneration per calendar day and the upper limit of the benefit for temporary incapacity for work to a resident natural person in annex 1 to form TSD with payment type 24 or to a non-resident natural person in annex 2 to form TSD with payment type 129 and pays income tax.

If the employer decides to compensate the employee for more than the difference between the average remuneration per calendar day and the upper limit of the benefit for temporary incapacity for work, the part exceeding the difference is subject to all labour taxes.

An employee and an employer may conclude in writing a flexible working time agreement under which the employee’s working time is divided into agreed working hours and additional hours, i.e. they may agree on working time as a period of time. If desired, an employee may work additional hours up to full-time working hours. For example, it may be agreed that the employee works 20–30 hours per week, of which 20 hours are guaranteed working hours and up to 10 hours are additional hours. A flexible working time agreement allows both the employer and the employee to organise work more flexibly in situations where the workload and the ability of to work may vary from time to time. The minimum workload of the employee must be 0.25.

Flexible working time agreement is governed by § 43³ of the Employment Contracts Act. An employee is registered in the employment register as an employee working on the basis of an employment contract and is entitled to all the rights arising from the Employment Contracts Act.

In the case of a flexible working time agreement, the minimum social tax liability applies to the employer in accordance with subsection 2 of § 2 of the Social Tax Act. This means that the employer is obligated to pay social tax for the employee on an amount which is at least the monthly rate prescribed by law, even if the remuneration paid to the employee is lower than that amount.

In 2026, the monthly rate on which the minimum social tax liability is based is 886 euros, i.e. the minimum social tax liability for the employer is 292.38 euros per month.

Payments made to an employee are subject to all labour taxes and are declared in Annex 1 to the tax return TSD under payment type 10, or, in the case of a non-resident, in Annex 2 to the tax return TSD under payment type 120.

More information on flexible working time agreement is available on the Labour Inspectorate's webpage "Flexible working time agreement".