Estonia - Other taxes and levies

Estonia - Other taxes and levies

Taxation of international executives

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Social security tax

Are there social security/social insurance taxes in Estonia? If so, what are the rates for employers and employees?

An employer and non-resident company operating in Estonia as employers must pay mandatory social security contributions on gross employment income. No ceiling has been set on social security contributions. The minimum social security obligation per employee per month as of 2016 is EUR 128,70. 

For employees working in Estonia, social security and unemployment insurance contribution rates for 2016 are as follows:

  • the rate charged to employers: 33,8% (33% + 0,8%);
  • the rate charged to employees: 1,6%.

Funded pension contributions at the rate of 2 or 3% are withheld on gross salary payments to residents if the employee has joined the funded pension system. It is obligatory to an Estonian tax resident born after 1 January 1983 to join the mandatory funded pension system. 

From 2014, the rate of funded pension contribution payment withheld may be 3%, if the person has submitted an application for a temporary increase in the rate of contribution. The person who submitted such application shall make a contribution at the increased rate paid in four consecutive years as of the year of the submission of the application (2014–2017). It is the obligation of an employer to verify if employees have submitted aforementioned application.

Estonia has concluded conventions on social security with different countries – Canada, Ukraine. Estonia has also concluded an agreement with Russia regulating pension matters.  In 2015 Estonia signed a Social Security Agreement with Australia. The Agreement will commence when all treaty, legislative and administrative processes are completed in both countries.

After joining the EU, Estonia followed the rules stipulated in Council Regulation (EEC) No 1408/71. From 1 May 2010, Council Regulations No 1408/71 and No 574/72 were replaced by Regulations No 883/2004 and No 987/2009. 

Where an employee is assigned from a non-treaty country to perform work duties in Estonia, the unemployment insurance premium and social tax are payable in Estonia, except if the international agreement prescribes different rules.

As a main rule, Estonian social security contributions are always payable by an Estonian employer or a non-resident (foreign) employer operating in Estonia if the work is performed in Estonia. This applies irrespective of the nationality of the employee. 

Gift, wealth, estate, and/or inheritance tax

Are there any gift, wealth, estate, and/or inheritance taxes in Estonia?

There are no inheritance or gift taxes in Estonia.

Real estate tax

Are there real estate taxes in Estonia?

With effect from 2013, the land below and around residential buildings is generally tax exempt if certain conditions are met.

Sales/VAT tax

Are there sales and/or value-added taxes in Estonia?

The standard VAT rate is 20% and the reduced rate is 9%.

The following supplies are subject to a VAT rate of 9%:

  • books and certain periodicals;
  • drugs, medicines;
  • accommodation services.

The following transactions are subject to zero-rated (0) VAT:

  • export of goods and intra-Community supplies;
  • cross-border business to business services;
  • goods placed into free zones or free warehouses, or certain goods listed in Annex V of Council Directive 2006/112/EC that are placed into a VAT warehouse;
  • export and import related transport services, international passenger services;
  • supply of aircraft used by an air carrier operating mostly on international routes;
  • supply of sea-going vessels for navigation on high seas;
  • provision of services on board vessels or aircraft during international transport;
  • supplies of goods under diplomatic and consular arrangements.

The following transactions are exempt from VAT:

  • transactions involving securities and financial services (with an option to tax domestically);
  • transactions involving immovable property or parts thereof (with an option to tax);
  • insurance transactions;
  • rental transactions involving immovable property or parts thereof (with an option to tax);
  • universal postal services;
  • lotteries and gambling;
  • certain education services;
  • transactions involving health and welfare.

Unemployment tax

Are there unemployment taxes in Estonia?

Yes.

For employees – resident and non-resident - working in Estonia, unemployment insurance contribution rates for 2015 are as follows:

  • the rate charged to employers: 0.8%;
  • the rate charged to employees: 1.6%.

Other tax

Are there additional taxes in Estonia that may be relevant to the general assignee? For example, customs tax, excise tax, stamp tax, and so on.

Local taxes

There are no local taxes in Estonia.

© 2016 KPMG Baltics OÜ, an Estonian limited liability company and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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