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Payroll Services

Monthly Estonian payroll and TSD reporting - gross-to-net, social tax, unemployment and pension, fully compliant with Estonian tax and labour law.

Core Offerings

  • Monthly gross-to-net salary calculations
  • TSD (income & social tax) filing by the 10th
  • Social tax, unemployment & pension withholding
  • Employment contract compliance checks
  • Sick leave, holiday & fringe-benefit handling
  • Payroll for foreign and remote employees

Payroll Services for Estonian Companies

Payroll is where a small mistake becomes an unhappy employee and a Tax Board correction in the same month. We run your payroll accurately and on time - every calculation reviewed by your own accountant - so people are paid correctly and every declaration is right the first time. We work with local companies, e-resident OÜs, and businesses with foreign or remote staff, in Estonian, Russian, and English, in line with Estonia’s:

  • Income Tax Act - 22% income tax, €700 monthly basic exemption
  • Employment Contracts Act - 40-hour week, leave and notice rules
  • Social Tax Act - 33% employer social tax

Estonian Payroll Taxes at a Glance (2026)

LinePaid byUsual rate
Income taxfrom gross salary after permitted deductions22%
Employee unemployment insurancefrom gross salary1.6%
Mandatory funded pension, pillar IIfrom gross salary2%, 4% or 6%
Social taxadditional employer cost33%
Employer unemployment insuranceadditional employer cost0.8%
General basic exemptionbased on the employee’s applicationup to €700/month

Gross salary alone does not show the full employer budget. Employer taxes are added on top, while net salary depends on the employee’s funded-pension rate and basic exemption application. Exceptions can arise with part-time work, foreign social security, sick pay or fringe benefits.

Want to estimate take-home pay and total employer cost before payroll runs? Use our salary calculator for Estonia 2026. When a calculator is no longer enough, we make sure payroll reaches TSD filing correctly every month.

Who Is It For?

  • A company hiring its first employee and needing correct employment registration.
  • A growing team with monthly salaries, hourly pay, overtime, vacations or bonuses.
  • An e-resident or international company with employees working in Estonia or cross-border.
  • A company where board-member fees, fringe benefits or remote work need separate review.

What We Do Each Month

Salary processing

  • Gross-to-net calculation for every employee
  • Income tax, unemployment and pension withholding
  • Holiday pay, overtime, and bonus handling
  • Sick-pay calculation (employer 70% for days 2–5)

Compliance filings

  • TSD (income and social tax declaration) by the 10th
  • Social tax and unemployment insurance payments
  • Employment register entries for hires and terminations

Employee support

  • Paperless payslips by email
  • Annual income statements (by 15 February)
  • Fringe-benefit reporting (company cars and other perks)

How the Payroll Month Works

1. Cutoff and source data We agree the date when you send work hours, overtime, vacations, sick leave, bonuses, new hires and terminations. The 25th of the month or the last working day before the payroll run is usually a practical cutoff.

2. Gross-to-net calculation We calculate net salary from gross pay, employee withholdings, employer taxes and, where needed, vacation or sick pay. We also check that basic-exemption and pension data are correct.

3. Payslips and payment instructions By the 5th of the next month, you receive the payroll summary for approval, employee payslips and bank payment instructions. If anything changed, we correct it before payout.

4. TSD and taxes by the 10th After approval, we prepare the TSD declaration and tax amounts. TSD is filed and payroll taxes are paid by the 10th of the following month.

What we check each month

  • gross-to-net calculation and total employer cost;
  • TSD lines and tax amounts;
  • vacation, sick leave, overtime and bonuses;
  • employment-register changes for new hires and terminations;
  • fringe benefits, if the company uses a company car or covers employee costs;
  • payslips sent to employees.

Why Choose ProfBalance

  • No surprises - a fixed monthly fee, not a charge per payslip.
  • Your own accountant - reachable by phone or email, not a ticket queue.
  • Local expertise - Estonian-language contract reviews, and minimum-wage and rate changes tracked for you.
  • Built for cross-border teams - remote and foreign-employee payroll handled correctly.
  • Compliance support - a penalty-free filing record since 2018 and audit support when needed.

Sources: Estonian Tax and Customs Board, 2026 tax rates and calculation of basic exemption.

Frequently asked questions

What taxes are withheld from salary in Estonia?
From the employee: income tax (22%, after the €700 monthly basic exemption), unemployment insurance (1.6%) and, if they have joined, the funded pension (2%, or an elected 4% or 6%). The employer additionally pays social tax (33%) and employer unemployment insurance (0.8%). As a rule of thumb, total employer cost is roughly gross × 1.338.
What is the income tax and basic exemption in 2026?
Income tax is a flat 22%. From 2026 the general basic exemption is up to €700 per month and no longer decreases as income rises; the employer applies the amount stated in the employee’s application.
When is the TSD declaration submitted?
Monthly, by the 10th of the following month. We prepare the TSD, the payment amounts and the employee payslips before then, so you always approve before anything is filed.
Can I hire a foreign or remote employee?
Yes. We handle registration in the employment register, employment contracts and payroll taxes for both local and foreign staff, including remote workers - a common need for e-resident and international companies.
How does sick pay work?
The first day is unpaid, the employer pays 70% for days 2–5, and from day 6 the Health Insurance Fund pays 70%. We calculate each case and reflect it in payroll and the TSD.
How is total employer cost calculated?
Total employer cost is gross salary plus employer taxes, usually 33% social tax and 0.8% employer unemployment insurance. Net salary depends on the employee’s basic-exemption application and funded-pension rate.
What does the company need to send each month?
Work hours, overtime, vacations, sick leave, new hires, terminations, bonuses and other payments. We agree a monthly cutoff date so payroll does not run late.
Can you help with the first employee?
Yes. We check the key employment-contract data, register employment, set up basic-exemption and pension information, and prepare the first payslip and TSD.
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