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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Health and sports
Expenses made to improve health in the amount of up to 400 euros per employee in a year are not taxed as a fringe benefit if the employer compensates these expenses to all employees.
An employee is:
- a person working according to an employment contract;
- an official;
- a member of the management or controlling body;
- a sole proprietor who sells goods to the employer for a period longer than six months;
- a natural person who works or provides services based on a contract for services, authorisation agreement or any other contract under the law of obligations.
The tax incentive does not apply to the health and sports expenses of an employee’s spouse, registered partner, cohabitee or direct blood relative, as well as to an employee of a company that belongs to the same group as the employer or an employee of another company.
Last updated on 08.01.2025
Last updated: 05.11.2025