Private person as employer

According to the Taxation Act, an employer may also be a private person who is not a self-employed person (sole proprietor) and employs another private person, such as a babysitter, repair worker, domestic worker, etc. A private person does not need to register as an employer.

The relationship between an employer who is a private person and his or her employee is governed by the Employment Contracts Act. An employment contract must be entered into in writing, but the contract of employment may be concluded orally for the purpose of carrying out work which does not exceed two weeks. The actual admission to work is equal to the conclusion of an employment contract. No person under 13 years of age can be employed.

For tax purposes, a private person is considered an employer if he or she has concluded an employment contract with another private person and pays the latter a salary.

The employer who is a private person must:

  • register the employee in the employment register (TÖR);
  • withhold income tax, calculate and pay social tax, withhold unemployment insurance premium and, if the employee is an obligated person within the meaning of the Funded Pensions Act, withhold a mandatory funded pension payment;
  • submit to the Tax and Customs Board a tax form TSD and, if he or she pays the employee a compensation for the use of a personal passenger car for working journeys, the declaration form INF 14.

The employer must submit the tax form TSD by the 10th day of the month following the month of payment at the latest, and pay the calculated and withheld taxes and payments to the bank account of the Estonian Tax and Customs Board also by the 10th day of the following month at the latest. The employer must submit a declaration form INF 14 regarding the compensation paid to the employee for the use of a personal passenger car for working journeys by 1 February of the year following the calendar year.

The employer who is a private person cannot deduct the amounts paid to his or her employee in the form of wages or similar remuneration from the annual income declared in the income tax return of a natural person.

Last updated: 14.04.2021

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