What you need to know when accepting envelope wages

It is generally employers’ obligation to calculate, declare and pay tax on wages. Employees can check whether their employer has registered their working relationship and declared their wages properly in the e-services environment e-MTA of the Estonian Tax and Customs Board.

If the employer has paid wages to the employee but has not declared it, the wages have to be declared and income tax paid by the employee.

Both the employer and employee are responsible for the tax liability arising from the conscious receipt of envelope wages. The receipt of envelope wages does not exempt the receiver from paying income tax.

When submitting the income tax return, please check and correct, if necessary, the data of your wages in item 5.1 Part II of the income tax return for a natural person. If you have received envelope wages, please indicate the amount that you have received into your bank account or in cash.

Submission of false information in the tax return may lead to a fine up to 1 200 euros.

Receivers of envelope wages run the risk of not being entitled to sickness benefits, redundancy payments or unemployment benefits. Due to unpaid taxes the amount of their pension will be lower, and in the event of a possible labour dispute with their employer, they will always be in a weaker position.

Most of us pay taxes because it is normal and dignified. By paying taxes we take care of Estonia.

Please read also about the Estonian Tax and Customs Board's campaign "Why refuse envelope wages?".

Last updated: 23.09.2022

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