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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Declaration and payment
Declaration
The compensation paid for the use of a personal car above the limit is declared in annex 4 of the tax declaration form TSD which is submitted by the 10th of the following month. The tax liability on fringe benefits is usually paid based on form TSD.
In declaration INF 14, the employer must indicate the amounts of benefits actually paid (including those declared as a fringe benefit) for the use of a personal car to a natural person during the calendar year when keeping records. The declaration is submitted by 1 February of the following year.
Tax liability
Tax liability arises when an employee is paid a (business-related) compensation, exceeding the limit, for rides to work and home when using a personal car.
Example
The employee submitted her driving records to the accountant, according to which the employee has used her personal car for work (including business-related rides between work and home) and travelled 1500 km (1500 × 0.50 = 750) in one month. The amount of 750 − 550 = 200 euros exceeding the tax-exempt threshold must be declared as a fringe benefit granted to the person, on which both income and social tax must be paid.
Last updated on 08.01.2025
Last updated: 05.11.2025