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.
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.
|Management Fee for Employer of Record Services / Monthly Payroll Costs||
Please contact us for a quote.
|Currency ?||Euro (EUR)|
|Payment Frequency ?||
|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:
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.
|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 ?||
|Employee Social Security Limits ?||
|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:
|Are employees required to have private pension/retirement ?||
|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|
|Minimum assignment length ?||
|Payment Currency ?||
|Onboarding Documents and Information Required ?||
|Can Sponsor Work Permit||
|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:
|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:
|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.
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