Revenue from social tax is used to fund pension insurance and state health care. Social tax is to be paid by an entrepreneur (employer) for an employee.
The social tax rate is 33% of the employee’s gross earnings (for instance, in the case of 1,000 euros in gross earnings, you pay 330 euros of social tax for the employee).
The taxation period is a calendar month and by the 10th of the subsequent month, the tax shall be declared in the tax return (Form TSD) (497 KB, PDF) and pay social tax to the Tax and Customs Board. A declaration can be submitted electronically at e-Tax and Customs Board (e-MTA) or by contacting the Tax and Customs Board’s regional tax centre.
An employer is required to pay social tax on wages as well as on fringe benefits.
In 2026, the monthly rate on which the minimum social tax liability is based is 886 euros, i.e. the minimum social tax liability for the employer is 292.38 euros per month.
In some special cases, social tax is paid by the Estonian state – for instance, for various persons who receive caregiver support and families with many children. Social tax is paid by the state for employees, whose loss of capacity for work has been assessed as 40% or more.
Reimbursement of social tax for employee with reduced work ability
An employer who employs an employee with reduced work ability (the employee has been established to have partial or no work ability or at least 40% permanent incapacity for work) can apply for a social tax incentive from the Unemployment Insurance Fund.
In order to receive the social tax incentive, the employer must submit an application to the Unemployment Insurance Fund for reimbursement of the social tax of an employee with reduced work ability.
The application can be submitted in the self-service environment of the Unemployment Insurance Fund and also by post, by e-mail (digitally signed) to [email protected] or in one of the offices of the Unemployment Insurance Fund.
The state pays social tax for an employee with reduced work ability on a monthly rate established for this purpose.
An employer must pay social tax for an employee with reduced work ability on the part of the salary which exceeds the monthly rate. If the actual salary of an employee is less than the monthly rate (e.g. a person works part-time), the unemployment insurance fund will still pay social tax for the employee on the basis of the monthly rate.
Social tax is paid by the state only for employees working on the basis of an employment contract. The state does not pay social tax for a person receiving remuneration on the basis of a contract for services, authorisation agreement or other contract under the law of obligations
Based on employer's application, the Unemployment Insurance Fund pays social tax for an employee at the rate of 20% of the set monthly rate. More information on social tax incentives for employees with reduced work ability is available on the page "Social tax".
NB! If an employer has not submitted an application to the Unemployment Insurance Fund for reimbursement of social tax from a monthly rate for an employee with reduced work ability, the employer does not have the right to reduce the social tax obligation in Annex 1/Annex 2 to Form TSD.
More information is available on the website of the Tax and Customs Board: Examples on how to fill in Annex 1 to Form TSD.
Social tax for sole proprietors (FIEs)
As a sole proprietor (FIE), you are required to pay social tax on business income. The social tax rate for a FIE is 33% of business income.
Unlike companies, the taxation period for FIEs is a calendar year, as the taxable income is determined once a year on the basis of the income tax return. When you operate as a FIE, you are required to pay social tax as advance payments four times a year by the 15th of each quarter. If your income is sufficiently high for the year, the Tax and Customs Board shall send a tax notice regarding an additional amount of social tax to be paid.
The Tax and Customs Board shall refund the overpaid amount of social tax by 1 October of the year subsequent to the taxation period.