“As before, the deadline for submitting Form TSD is the 10th day of the month following the month in which a payment is made. For payments or expenses made in January 2025, the form must be submitted by 10 February 2025 at the latest. Due to the many tax changes, we ask companies to submit the declaration before 10 February, if possible, in order to make the submission process smoother,” said Külli Külm-Kivistik, Service Owner at the ETCB’s Income Tax Department.
Tax rates
- The rate of income tax to be withheld is 22% for natural persons and 22/78 for legal persons. It applies to payments and expenses made from 1 January 2025.
- The basic exemption is 7,848 euros per year, i.e. 654 euros per calendar month. The basic exemption of 9312 euros per year, i.e. 776 euros per calendar month, applies to people who have reached the retirement age. In 2025, the “tax hump” will be the same as last year.
- The funded pension contribution rate is 2 %, 4 % or 6 % according to the person's wishes. Before making a salary payment, persons’ contribution rate should be checked from the Estonian Funded Pension Registry.
- The basis for the minimum social tax obligation is the monthly rate of 820 euros and the minimum social tax obligation is 270.60 euros.
- The advance payment rate of the income tax of a credit institution is 18%, which must be declared for the first quarter on the May TSD declaration by 10 June 2025.
Tax-exempt limits
- The tax-exempt limit for daily allowance during an assignment abroad increased. It is 75 euros for the first 15 days of an assignment abroad, but no more than for 15 days a calendar month, and 40 euros for each following day.
- The tax-exempt limit of compensation for using a personal car increased. On the basis of driving records of work trips, 0.5 euros per kilometre can be compensated exempt from tax, but no more than 550 euros a month per each employer paying the compensation.
- The costs of meals provided to crew members and civil aircraft crew members during their voyage are exempt from tax up to a maximum of 20 euros a day per person.
- Employers’ business-related expenses for the accommodation of an employee working on the basis of an employment contract are not deemed to be a fringe benefit if the expenses per accommodated employee in Tallinn or Tartu are up to 500 euros and in other cases up to 250 euros. The expenses are not considered as fringe benefits if the employee's place of residence is located at least 50 km from the place of work and the employee does not own property used as housing closer to the place of work.
- Income tax is not charged on goods delivered or a service provided for the purposes of advertising, the value of which without value added tax is up to 21 euros.
- The tax-exempt limit for costs of entertaining guests is 50 euros per calendar month, plus 2% of the sum of the payments subject to individually registered social tax.
Occupational health expenses and expenses made for improving health
- Previously, the precept or risk assessment of the occupational health doctor was important regarding expenses related to occupational health and improving health. Starting from 2025, expenses that are not provided for in the Occupational Health and Safety Act, but which are reasonable and necessary considering the specifics of the work, may also be exempt from tax.
- Expenses made for improving the health of an employee to the extent of 400 euros per employee in a year are not subject to taxation as a fringe benefit if the employer has enabled these to all employees. Expenses directly related to massage were added to the list.
Other
- The use of social tax compensation for an employee with reduced work ability to the extent of at least the monthly rate is permitted on the condition that the employer is subject to the decision of the Unemployment Insurance Fund to pay social tax on the monthly rate for the employee and the Unemployment Insurance Fund declares the social tax paid on the monthly rate on the ESD declaration.
- All state or municipal educational institutions, universities in public law, private schools and institutions offering continuing education are approaching the due date for INF3, i.e. the declaration of training expenses paid by natural persons. The deadline for submission is 3 February 2025.
- The deadline for submitting Parts I-III of INF14, i.e. the declaration of compensation for use of personal car, training expenses and expenses made for improving employees’ health, is also 3 February 2025. The deadline for Part IV, i.e. the declaration of loans granted and repaid, is the 20th day of the month following the quarter.
- If a company has received dividends taxed at a lower rate from another resident company, the withholding tax rate of 7% will remain in force upon their further payment to a natural person.
- The deadline for submitting the declaration of income and social tax (TSD) is the 10th day of the month following the month in which the taxable payment or expense is made. In order to ensure a smooth submission of the declaration, we recommend submitting it a few days before the due date.
