Payroll in Estonia - Detailed Guide

Hiring employees requires setting up the payroll in Estonia. This procedure must be completed as soon as the work contract is signed. We offer tailored payroll services through our accountants in Estonia. Read the article below and find out how we can help you.

Quick Facts
Employee/employer registration services (YES/NO)	Yes, our accountants in Estonia can assist with the registration for employment purposes.
Payroll setup services (YES/NO)	Yes, we can manage the payroll setup process.
Employee records setup and maintenance services (YES/NO)	Yes.
Employee remuneration computation	Yes, our Estonian accountants will handle the procedure.
Mandatory contributions for employees	Unemployment insurance and public pension.
Mandatory contributions for Estonian employers	– social tax, – state pension, – public healthcare, – unemployment insurance.
Payroll reporting requirements	Monthly.
Social security contribution for employees	3.6% of the gross salary.
Social security contribution for employers	33.8% of the gross salary.
Employment statutory filing requirements	Monthly filings must be made.
Special requirements applicable to foreign employees (YES/NO)	No.
Assistance in drafting labor contracts (YES/NO)	Yes, our local specialists can assist with the drafting of Estonian labor agreements.
Specific services for foreign companies (YES/NO)	Yes, we can assist foreign companies with the registration with the Estonian Tax and Customs Board and the Employment Register.
Assistance in employment regulations (YES/NO)	Yes, we can also assist in meeting employment compliance requirements.
Special requirements for foreign employers in Estonia (if any)	Foreign companies without a permanent establishment must register as non-resident employers.

What are the payroll services you offer in Estonia?

The following services are available through our accountants in Estonia:

registration for social security for the employer;
registration for social security for each employee;
preparation of payroll documents;
payslip generation and salary payments;
documentation filing in accordance with the tax regulations applicable to employment;
maintenance of payroll records.

NOTE: If you are about to register a company in Estonia, you can also discuss tax registration with our specialists beforehand. This way you can complete all tax formalities at once.

When do I need to set up the payroll for an Estonian company and where?

Payroll must be set up before you hire the first employee. The company must be registered as an employer with the Tax and Customs Board, where employees are entered in the Employment Register. Our accountants can handle the procedures on your behalf.

What is the payroll frequency in Estonia?

In Estonia, the employer withholds taxes from gross wages monthly. Therefore, workers do not have to make any other payments or deposit any other monthly taxation returns.

Below, we have an infographic on this subject:

What are the monthly payroll operations I must comply with in Estonia?

The following:

employees’ wage computation;
payslip issuance;
income tax and social security contributions withholding;
salary payments;
payroll report generation;
payroll and income tax reporting and payment by the 10^th of the current month for the past one.

If you want to open a company in Estonia and need assistance with payroll procedures, you can rely on us for both procedures.

What social security contributions must be paid in Estonia?

Here are the contributions to be made:

public pension and health insurance;
unemployment insurance;
payments to the second pillar pension schemes.

Payments and declarations must be made on a monthly basis with the Tax Authority.

What are the payroll taxes I need to pay in Estonia?

As an employer, you will be liable for:

a 20% payment for pension contribution;
0.80% payment for unemployment insurance;
13% payment for health insurance.

Apart from these, a minimum monthly social tax obligation of EUR 292.38 per employee (33% of the EUR 886 monthly rate in 2026) generally applies.

With respect to the payroll taxes for employees, a 2% (or, at the employee's choice, 4% or 6%) funded pension contribution applies to employees born after December 31st, 1982 who participate in the second pillar, and an unemployment insurance of 1.6% must be deducted from the gross salary. Also, employees are subject to a 22% flat income tax.

We also have a video on this subject:

Do the same payroll obligations apply to foreign employees in Estonia?

It depends on whether those employees live or not in Estonia. Employees who work from abroad will pay the taxes on the income they earn in Estonia, while residents will be taxed on their worldwide income here.

The first and most important thing to know is that there are two situations that apply to foreign workers, namely:

the employee is a posted worker;
the employee comes to Estonia for business.

In the posted worker category, you will find:

a person who works in Estonia as a transferee from another country;
a person who works in Estonia temporarily;
a person who receives income in Estonia from a subsidiary company located abroad.

In the other category, the employees who come to Estonia on a business trip are people who do not stay here for more than 30 consecutive calendar days.

What are the tax obligations when hiring employees in Estonia?

The taxation scenarios depend on whether the employer (the Estonian company) is a resident or non-resident. Here is how they apply:

in the case of non-resident companies hiring business trip personnel, there is no tax liability, which is why they need to respect the legislation in their home country and that of the foreign employee;
in the case of non-resident businesses hiring posted workers, the employer must register with the Tax Authority here and comply with all Estonian payroll requirements;
in the case of resident companies, they need to comply with payroll conditions imposed in Estonia, no matter the status of the employee.

For more information on the payroll in Estonia and our related services, please get in touch with us.