Easily manage employment in Estonia

Payroll services in Estonia

Estonia has a digital-forward economy with key industries in technology, finance, and manufacturing. With specific labor laws and tax regulations, employers in Estonia must ensure compliance with local payroll requirements, including social security contributions, employment contracts, and tax obligations. Understanding these regulations is essential for smooth payroll operations and legal compliance.

Payroll breakdown in Estonia

Employers in Estonia must adhere to national payroll regulations regarding wages, taxes, and social contributions. Below is an overview of key payroll components:

Minimum wage and working hours

• Minimum wage: Estonia’s minimum wage is EUR 725 per month.
• Payroll frequency: Salaries are generally paid monthly.
• Standard working hours: The normal workweek in Estonia is 40 hours, typically spread over five days.
• Overtime: Employees are entitled to additional pay for overtime work, calculated based on labor regulations.

Taxation and social security contributions

• Personal income tax: Estonia has a flat income tax rate of 20%.
• Employer contributions:
• Social security: 33% of the gross salary.
• Employee contributions:
• Social security: 1.6% of the gross salary.
• Corporate tax: The corporate income tax rate in Estonia is 20% on distributed profits.
• Tax reporting: Employers must file payroll taxes and contributions with the Estonian Tax and Customs Board regularly.

Payroll compliance in Estonia

• Employment contracts must be provided in writing and specify terms such as salary, working hours, and job responsibilities.
• Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
• Employers must stay updated on changes to Estonia’s labor laws and tax regulations to avoid penalties.

Quick facts: Important considerations for employers

• Payroll frequency: Salaries are generally paid monthly.
• Currency: Payroll in Estonia is processed in Euros (EUR).
• Tax reporting: Employers must file payroll taxes and contributions with the Estonian Tax and Customs Board.
• Payroll deductions: Employers must ensure accurate deductions for social security and income tax.
• Payroll compliance : Employers must stay updated on changes to tax rates and reporting requirements.

Run payroll in Estonia with Remote

Managing payroll in Estonia requires careful attention to tax regulations, employment laws, and social security requirements. Employers must stay informed about tax rates, wage laws, and reporting deadlines to ensure smooth payroll processing and avoid penalties.

The good news is, you can pay anyone, anywhere — from your team in the office to your team abroad, all with Remote Payroll. To see just how easy global payroll can be with Remote, book a demo today.