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Income tax information for employees

A natural person has to apply for the Estonian ID-card and ID-code in order to work in Estonia. You can read more about applying an ID-card on the website of the Police and Border Guard Board.

In Estonia, an employer withholds income tax from payments made to an employee, pays social insurance taxes, files employees to the employment register.

An employee does not have to get any tax-card.

You can check your registration in the employment register and the amounts and types of taxes the employer has paid from your wages monthly in the e-Tax-Board/e-Customs. For entering the e-Tax Board/e-Customs, verification by means of an ID-card, mobile-ID or online banking is required.

An income tax return can be submitted via the e-Tax Board/e-Customs starting from 15 February until 31 March of the year following the period of taxation. You do not have to have an agent or a representative to contact the tax administration in Estonia, you can do it yourself.

The e-Tax Board/e-Customs and the income tax return forms are also available in English.

If a natural person has only received income from employment and no other income, an income tax return does not have to be submitted, as income tax has already been paid by the employer, but you may do so, as you may get some refunds.

Refunds of income tax are paid on educational costs, optional funded pension payments, interests paid on home loans, to parents with two or more children.

The data and information received from the employer about amounts of wages and taxes paid on it is already pre-filled in online (the tax return and lots of information about deductible amounts as home loan interests paid to Estonian banks, educational costs to the Estonian schools and so on). If there is anything missing in the tax return, for example no foreign income, the pre-filled information has to be amended. If completed, the pre-filled tax return has just to be confirmed and submitted.

If the employee is regarded to be the Estonian resident, an application for deduction of tax-free amount from amount of wages before calculation of income tax has to be submitted to only one of the employers and the basic exemption is taken into account at the moment of payment.

In case of a non-resident, the tax-free amount cannot be taken into account by the employer, thus the employee can submit a tax return in order to get refund from basic tax allowance, but only if he or she resides in one of the EU countries or Norway, Island or Lichtenstein.

A tax return must be submitted if taxable income, that is subject to taxation in Estonia, is received, but on which no income tax has been withheld upon payment (rental income, gain from transfer of property, business income).

When filing an income tax return, a distinction must be made between a resident and a non-resident. A natural person is regarded as a resident if his/her place of residence is in Estonia, or if he/she stays in Estonia for at least 183 days per consecutive 12 calendar months.

A resident natural person pays income tax on the income earned both in Estonia and outside Estonia. A non-resident pays income tax on the income earned only from the Estonian source of income.

Thus, in order to calculate taxes on wages properly, the tax residency must be determined. It can be done by submitting form R to the Estonian tax administration who decides if the person becomes the Estonian tax resident or not.

Further questions

Information concerning income tax returns can be obtained on the phone hotline 880 0810, which is at your disposal from Mondays to Thursdays from 8:30 a.m. to 4:30 p.m. and on Fridays from 8:30 a.m. to 3:30 p.m.

Information about the taxation of natural persons can be obtained on the phone number 880 0811. You can also contact the Estonian Tax and Customs Board on Skype: mta.eesti.

The website address of the Estonian Tax and Customs Board is http://www.emta.ee/eng, general information is also translated into English. All other contact information can be found there.

 

02.01.2017