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The Ultimate Guide To
Employment in Estonia

Estonia Facts

Population size: 1,315,480
Currency: Euro (EUR)
Capital city: Tallinn
Languages spoken: Estonian
Ease of Doing Business: 15 (World Bank Starting a Business Rank)

GEO Solutions or DIY Employment in Estonia?

Companies entering Estonia must make a decision whether to use their own resources for a Do-It-Yourself (DIY) approach, or to use a Global Employment Organization to handle payroll and employment responsibilities. A GEO or Estonian Employer of Record solution makes it faster, easier and cheaper to deploy staff if they don’t have an Estonian entity established that can run payroll.

A DIY approach will typically be delayed until there is a properly incorporated company ready to run payroll and may be a costly option. Shield GEO can deploy foreign staff in 4-6 weeks and local staff in 48 hours. Additionally, Shield GEO is responsible for all compliance issues related to the employment.

Outsourcing Employment Through a GEO Employer of Record Service

Using Shield GEO Employer of Record Services in Estonia

Compliance with local employment requirements is just one of the issues foreign companies face when employing staff in Estonia. For companies which intend to employ their staff directly through their incorporated Estonian entity, professional legal advice is recommended. Shield GEO provides an alternative path for companies to outsource the employment of their staff in Estonia.

As a Global Employer Organization (GEO), Shield GEO acts as the Employer of Record and ensures the employment is compliant with host country regulations regarding employment. In addition, Shield GEO will handle payroll processing, tax and immigration. Using Shield GEO is the fastest and most cost effective way to deploy local and foreign workers into Estonia.

The Shield GEO solution is an attractive alternative where:

– the company is looking to employ staff quickly

– the company doesn’t have an appropriately incorporated entity in Estonia

– the company wants to work within a defined budget

– the company wants to limit its initial commitment in Estonia

– the company needs help with tax, employment, immigration and payroll compliance in Estonia

Shield GEO can contract directly with the company to employ and payroll their staff in Estonia. Shield GEO supplies local employment contracts for the staff which ensure that local statutory requirements are met covering issues such as termination, probation periods, leave entitlements and statutory benefits.  Shield GEO is able to advise companies how to cover local employment regulations whilst still providing consistent global employment policies. Understand more about outsourced employment through Shield GEO.

Payroll

Payroll Estonia
Management Fee for Employer of Record Services / Monthly Payroll Costs

Please contact us for a quote.

Currency ? Euro (EUR)
Payment Frequency ?

Monthly

Statutory Requirements for Employee Payslips ?

There are no statutory requirements for employee payslips. Shield has a company template and employees are emailed their payslips.

Income Tax Deductions ?

Resident individuals are entitled to the following deductions on taxable income:

  • EUR6,000 on taxable income up to EUR14,400
  • A deduction on taxable income over EUR14,400 amounting to: 6,000 – 6,000 / 10,800 x (sum of income – 14,400)
  • Contributions to unemployment insurance, compulsory pension schemes and certain foreign social security schemes
  • Interest paid in relation to acquiring a home
  • 20% of rental income from immovable property

An Estonian non-resident from a European Union (EU) or European Economic Area (EEA) member state who has derived at least 75% of their taxable income from Estonia is allowed to benefit from the deductions available for residents.

 
Grossed income Tax Rate (%)
All Income 20

Income is subject to a flat tax rate of 20% in Estonia.

There are no special taxation rules for expats.

Tax Returns Supplied

Yes, Shield GEO can organise tax returns in Estonia.

Corporate Tax Requirements

20% is taxed on gross taxable income in Estonia. To calculate corporate income tax on net taxable income, divide the net taxable income by 0.8, and apply the 20% tax rate.

From 2019, a corporate income tax rate of 14% is applied to regular profit distributions. A regular profit distribution amounts to the average dividend for the last 3 years. 20% is levied on the dividend amount which exceeds the regular profit distribution. To calculate corporate income tax on a regular profit distribution, divide the amount by 0.86 and apply the 14% tax rate.

Employers Social Security and statutory contributions

The employer is required to make a social security contribution amounting to 33.8% of the employee’s gross salary.

Employees Social Security and statutory contributions

The employee is required to make a social security contribution amounting to 1.6% of the employee’s gross salary.

Employer Social Security Limits ?

None

Employee Social Security Limits ?

None

Is employee social security deducted ?

The employee’s social security contribution is deducted at source by the employer.

Special Requirements for Expense Reimbursements to Employee ?

Scanned receipts and an expense report (in a format provided by Shield) are required.

Expenses incurred in the following activities may entitle the employee to expense reimbursements:

  • Academic or professional courses
  • The use of a private car for work-related purposes (so long as they do not exceed the statutory limits)
  • Mobile phone usage
Are employees required to have private pension/retirement ?

No

Public Medical Insurance ?

Health insurance is provided to all employees who are working on the basis of an employment contract.

Private Medical Insurance ?

Private medical insurance is not provided to all employees. However, it is recommended for foreign employees to reduce long wait times in the public health system.

General Employer of Record Service Terms

General Employer of Record Service Terms
Minimum assignment length ?

None

Payment Currency ?

Euro (EUR)

Onboarding Documents and Information Required ?
  • Copy of passport
  • Driver’s licence
  • Other ID and/or proof of identity
  • ID number
  • Social Security number
  • Bank account details
  • Proof of address
  • Job description
  • Degree certificate
  • CV
  • Technical qualifications
  • Photographs
  • Police check
  • Medical exam

Work Permits

Work Permits
Can Sponsor Work Permit

No

Work Permit processing time

Within 10 days of submitting a valid application

Work Permit process

Citizens of a non-EU country looking to work in Estonia for up to 6 months in a year are required to apply for a long-stay (D) visa.

While the D visa may be valid for up to 365 days, it is recommended for citizens of non-EU countries looking to work for longer than 6 months to apply for a temporary residence permit.

The process for obtaining a D Visa is outlined below. For information on a obtaining a residence permit, see ‘Estonia Immigration and Work Permits’.

Step 1: Register with the Estonian Police and Border Guard Board

The employer or Shield GEO registers the employee’s employment with the Estonian Police and Border Guard Board.

Step 2: Apply for a D Visa

The D visa is applied for in person at an Estonian embassy or consulate* or at the Police and Border Guard Board (PPA) in Estonia.

The following documents are required for the application:

  • A valid travel document issued within the previous 10 years, contains at least 2 blank pages for visas and is valid for at least 3 months after the expiration date;
  • A completed and signed application form
  • A photo (35mm x 45mm);
  • An insurance policy with a minimum coverage of EUR30,000 for the entire duration of the employee’s stay
  • Documents indicating the purpose of the trip e.g. documents proving that the applicant is going to study in Estonia
Work Permit Validity ?

A short term employment visa (D visa) is valid for up to 6 months. A temporary residence permit for employment is valid for up to 2 years and may be extended for 5 years at a time. An extension may be obtained by submitting an application at a Service Office at least 2 months prior to the expiry date.

Are work permit processes different for different nationalities ?

EU citizens may reside and work in Estonia for up to 3 months without a visa or residence permit.

Possible to transfer work permit sponsor whilst in country ?

Yes, transferring to a new work permit sponsor requires notifying the Police and Border Guard Board in writing.

If the employee terminates their employment, is a holder of a residence permit which gives them the right to work, and seeks to be employed by a different employer, they must apply for a new residence permit.

Work Permit – When Can Employee Start Work ?

The employee can start work when the employer has registered their employment in Estonia with the Police and Border Guard Board.

Employee required to attend consulate/embassy in home country? ?

The employee may apply for a temporary residence permit at the Estonian consulate or embassy in their home country. Alternatively, they may make the application at an Estonian Service Office.

Work Permit Dependent Process ?

The following documents are required:

  • Proof of marriage or kinship
  • Proof of income of the family member indicating maintenance of the applicant during the 6 months preceding submission of the application
Can Spouse work on dependent visa?

No, the employee’s spouse is required to obtain a temporary or permanent residence permit in order to work in Estonia.

  • Estonia Employer of Record Overview

Estonia Employer of Record Overview

  • Estonia Employer of Record Overview

Estonia

Estonia

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