Visiting Researcher's Guide - EURAXESS Estonia

5.2 Taxation of residents
TAXATION
The Estonian tax system is considered to be simple and liberal. One big difference compared to
most European countries is that income tax has only one overall flat rate.
Direct taxes are income tax, unemployment insurance and the funded pension payment. As of
January 2007, income tax is 22%, and there is a monthly unemployment insurance tax of 0.6%,
which is deducted from your salary by your employer. According to current legislation, the
income tax rate is set to decrease by one percent per year until it reaches 20% in 2009.
A funded pension payment is withheld from your salary at a rate of 2%, if you have joined the
optional funded pension system.
2000 kroons of the monthly salary is income tax free. You must
apply to your employer for the income tax free sum to be taken into
account monthly for salary payments. Income tax is not charged on
compensation for official travel, accommodation and daily allowances,
if these are within the limits established by the law.
Social tax is paid by employers at a rate of 33% on all payments
made to employees for salaried work performed, as well as 0.3%
unemployment insurance. The social tax is not part of the salary
figure; it is calculated on the basis of the agreed salary. 13% of the
social tax goes to the Health Insurance Fund and 20% goes to the
state Pension Insurance Fund.
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