"Paying taxes is our jointly chosen social agreement that ensures the functioning of the state and enables social guarantees for each person” (Estonian Tax and Customs Board)
Foreign citizens working for an Estonian employer are usually required to pay taxes in Estonia.
In Estonia, employment relationship-related taxes are paid both by the employer and the employee.
Taxes paid by the employee
Taxes and payments on the remuneration of the employee:
- unemployment insurance premium = gross remuneration x 1,6%
- funded pension payment = gross remuneration x 2%
- income tax = (gross remuneration – basic exemption amount – unemployment insurance premium – funded pension) x 20%
Additional information concerning remuneration and taxes can be obtained from the Finance Office.
Taxes paid by the employer
The employer withholds the required taxes and charges from the employee’s remuneration (income tax, unemployment insurance premium, funded pension payment) and additionally pays to the state the following taxes and charges:
- social tax = gross remuneration x 33%
- employer’s unemployment insurance premium = gross remuneration x 0,8%
Estonian pension system is based on three pillars:
- I pillar: state pension
- II pillar: mandatory funded pension
- III pillar: supplementary funded pension
A more detailed overview of the Estonian pension system can be found on the homepage of Pensionikeskus (Estonian Funded Pension Registry).
Read more about taxes in Estonia on Work in Estonia relevant web page.