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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Employee’s gains from transfer of securities
Employees incur income tax liability from the gains of transfer of securities (subsection 1 of § 15 of the Income Tax Act). Employees’ gains (loss) from the transfer of securities (acquired holding) are calculated as the difference between the selling price and the acquisition cost (subsection 1 of § 37 of the Income Tax Act).
Employees can take into account as the acquisition cost, according to § 48 the Income Tax Act, the amount taxed as a fringe benefit, or with income tax in a foreign country (e.g. in the case of a foreign company belonging to the same group as the employer) and/or the option premium paid by the employee and the realisation price of the holding.
The acquisition cost must be documented.
Last updated on 08.01.2025
Last updated: 05.11.2025