Pursuant to subsection 1 of § 48 of the Income Tax Act, employers pay income tax on fringe benefits granted to employees.
Based on clause 7 of subsection 1 of § 2 of the Social Tax Act, social tax is paid on fringe benefits within the meaning of the Income Tax Act, expressed in monetary terms, and on income tax payable on fringe benefits.
Declaration
The period of taxation of fringe benefits is one calendar month. The employer declares the fringe benefits granted to employees and income and social tax calculated on fringe benefits during a calendar month in Annex 4 of the form TSD, which must be submitted together with the form TSD to the Estonian Tax and Customs Board by the 10th day of the month following the calendar month in which the fringe benefit was granted. The tax amount is paid to the bank account of the Tax and Customs Board by the same date at the latest.
Legal basis
Handbook “Fringe benefits”
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Benefits for employees with disabilities
The employer can pay compensation to an employee with a disability for the use of a motor vehicle only if this employee is unable to use public transport to travel between the place of work and residence, or the use of public transport causes a significant decrease in mobility and work ability.
The conditions and limits established for a personal car also apply to a motor vehicle used by a person with a disability: the tax-exempt limit of compensation paid to one person is 0.50 euros per kilometre when records are kept, but no more than 550 euros per calendar month per each employer paying the compensation. A person with a disability can be paid compensation for the use of a motor vehicle only if their passenger car or motor vehicle is not in the ownership or possession of the employer.
Rides between the place of residence and the place of work can only be compensated when records are kept. It is not possible to pay tax-exempt compensation for the use of a motor vehicle without keeping records.
Last updated on 17.01.2025
Last updated: 05.11.2025