What is the amount of tax burden on wages in Estonia?

By Punamoon OÜ

Posted April 24, 2017

Rates of taxation as of January 1, 2025

1. Taxes on wages

1.1 Taxes withheld from gross remuneration for work of an employee

Income tax is 22%
Unemployment insurance is 1.6%
Pension insurance is 2%, 4% or 6%
Total tax burden withheld from wages is 25.6%, 27,6% or 29,60%

1.2 Taxes charged (“on top of”) gross remuneration for an employee’s labor

Unemployment insurance is 0.8%
Social tax is 33%
The minimum obligation for social tax is EUR 270,60 EUR (820 x 33%) per month (usually applied at one main working place)
Total amount of taxes charged on top of wages is 33.8%

1.3 Tax benefits to the extent of taxation of wages

Income tax is not suffered

A non-taxable amount is EUR 0-654 per month and EUR 0-7848 per year (prerequisite – application to an employer, typically filed at one main working place)

Example 1

Gross remuneration for labor is EUR 1,000.
The amount of all taxes (withheld and accrued) is EUR 442,20.
Net wages is EUR 895,80.
Employer’s total costs and the wage fund are EUR 1,338.
Tax burden on wages taking into consideration the non-taxable amount of EUR 654 and pension insurance of 2% is 44,22% of the gross remuneration for labor.

Example 2

In Estonia, the minimum gross remuneration for labor is EUR 886.
The amount of all taxes (withheld and accrued) is EUR 375,39.
Net wages is EUR 810,08.
Employer’s total costs and the wage fund are EUR 1,185,47.
Tax burden on wages taking into consideration the non-taxable amount of EUR 654 and pension insurance of 2% is 42,37% of the gross remuneration for labor.

Example 3

Gross remuneration for labor is EUR 1,500.
The amount of all taxes (withheld and accrued) is EUR 783,20.
Net wages is EUR 1,223,80.
Employer’s total costs and the wage fund are EUR 2,007.
Tax burden on wages taking into consideration the non-taxable amount of EUR 436 and pension insurance of 2% is 52,21% of the gross remuneration for labor.

Example 3

Gross remuneration for labor is EUR 2,100.
The amount of all taxes (withheld and accrued) is EUR 1,230,77.
Net wages is EUR 1,579,03.
Employer’s total costs and the wage fund are EUR 2,809,80.
Tax burden on wages taking into consideration the non-taxable amount of EUR 0 and pension insurance of 2% is 58,61% of the gross remuneration for labor.