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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What kind of vehicle can tax-exempt compensation be paid for?
Compensation can be paid for the use of a car, which is not in the ownership or possession of the employer. Therefore, the car does not have to be the personal property of the user, but the right to use it must be proven. The right of use is indicated on the vehicle registration certificate. M1 and M1G category vehicles are considered passenger cars.
If compensation is paid to a person with a disability, as an exception, the costs of using any motor vehicle may be reimbursed. According to § 2 of Road Traffic Act, a motor vehicle means a power-driven vehicle. A vehicle means a device powered by a motor or in another way, designated for road traffic or driving on the road.
Last updated on 08.01.2025
Last updated: 05.11.2025