Monthly rate on which the minimum social tax liability is based
Payers of social tax are subject to the same minimum rate of social tax liability.
In 2022, the monthly rate on which the minimum social tax liability is based is 584 euros, i.e. the minimum social tax liability for the employer is 192,72 euros per month.
The procedure for calculation of the minimum liability of social tax has been established by the Minister of Finance Regulation No 17 of 15 March 2013 (in Estonian).
Sole proprietors pay advance social tax payments four times a year (by the fifteenth day of the last month of each quarter). The Estonian Tax and Customs Board calculates the final social tax liability per year on the business income declared in the income tax return of the sole proprietor and sends a tax notice to the sole proprietor regarding the additional amount of social tax due. The deadline for the payment of additional social tax is 1 October. Information about payment of taxes
Social tax is paid by:
- employers; the tax is declared in the tax return form TSD and is paid monthly;
- sole proprietors on their business income;
- the state, rural municipality or city (see special cases of paying social tax); the tax is declared in the tax return form ESD and is paid monthly.
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 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 (SKA).
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.
Social security agreements
Last updated: 03.10.2022