Social tax

Social tax is a financial obligation which is imposed on taxpayers to obtain revenue required for pension insurance and state health insurance and which is subject to performance pursuant to the procedure, in the amount and during the terms prescribed by the Social Tax Act.

The income derived from the vigorous activity (employment, business) is subject to social tax. The list of amounts subject to social tax is provided for in subsection 2 (1) of the Social Tax Act and of amounts on which social tax is not imposed is provided for in section 3 of the same Act.

The general rate of social tax is 33 per cent. In the cases provided for in clauses 6 (1) 3¹), 3²), 3³), 6), 6¹), 8), 9), 11), 13) and 15) of the Social Tax Act and in the case of the unemployment insurance benefit paid by the Estonian Unemployment Insurance Fund, the rate of social tax is 13 per cent of the taxable amount.

Social tax is paid by:

• the persons making taxable payments – employers; the tax shall be declared in the tax return (Form TSD) and paid monthly;

• sole proprietors on their business income;

• the state, rural municipality or city for the persons specified in subsections 6 (1) and (1¹) of the Social Tax Act; the tax shall be declared in the tax return (Form ESD) and paid monthly.

A minimum rate of the uniform social tax liability is established to the payers of social tax to be paid by:

• employers (in the cases provided for in subsections 2 (2) and (3) of the Social Tax Act,

• the state (for the persons listed in section 6 of the Social Tax Act) and

• sole proprietors on their business income (pursuant to subsection 2 (5) of the Social Tax Act).

In 2020, the minimum monthly obligation for social tax is 540 euros, it means, for an employer, the minimum obligation for social tax is 178.20 euros monthly.

In 2019, the minimum monthly obligation for social tax is 500 euros, it means, for an employer, the minimum obligation for social tax is 165 euros monthly.

In 2018, the minimum monthly obligation for social tax is 470 euros, it means, for an employer, the minimum obligation for social tax is 155.10 euros monthly.

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 shall pay social tax four times during the year as advance payments – by the fifteenth day of the last month of each quarter. The Estonian Tax and Customs Board shall calculate the final liability of social tax in a year on the business income declared in the income tax return of the sole proprietor and send a tax notice to the sole proprietor on the additional amount of social tax due. The deadline for payment of the additional amount of social tax due is 1 October.