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Payroll in Estonia

Payroll in Estonia

Payroll in Estonia is commonly is used to denote the records of a company of its employees’ income and the withholding taxation. Payroll is important as Estonian payroll taxations greatly affect the net income of most businesses and as they are set by certain rules and regulations. It is a common practice for companies in this country to hire company formation specialists in Estonia to advise on the payroll procedures.

Income tax in Estonia

The income taxation in Estonia is considered proportional; it is levied at 20% as a standard rate in 2015. Therefore, employees have the opportunity to retain most of their salaries, unlike neighboring countries like Sweden or Finland. 

Employees can also deduct their following expenses:

• housing loan interest;

• training expenditures;

• donations and gifts;

• pension contributions;

• other expenses can be deducted. Our company formation advisors in Estonia can provide further details on what these other expenses consist of.

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

Moreover, the employer based in Estonia is obliged to pay the 33% social tax from the employee’s gross wages. This tax is paid by the employer, being based on the employee’s gross wages, and not retained from his or her wages.

An employee who has been hired by an employer in Estonia has to be registered by the company with the Employment register, automatically being covered with social and health insurance in the country.

Payroll services we offer in Estonia

As Estonian company formation professionals, we offer the following payroll services in Estonia:

• we can help establish a person’s employment status;

• we can assist with the preparation of the monthly wage documentation;

• we are able to help register with the Employment register;

• we assist with tax registrations for businesses.

For more information on the payroll in Estonia, please get in touch with our company registration firm in Estonia