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)
| Line | Paid by | Usual rate |
|---|---|---|
| Income tax | from gross salary after permitted deductions | 22% |
| Employee unemployment insurance | from gross salary | 1.6% |
| Mandatory funded pension, pillar II | from gross salary | 2%, 4% or 6% |
| Social tax | additional employer cost | 33% |
| Employer unemployment insurance | additional employer cost | 0.8% |
| General basic exemption | based on the employee’s application | up to €700/month |
| Minimum wage, full-time | statutory floor | €946/month, €5.67/hour |
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.
The minimum wage rose from €886 to €946 per month (€5.67 per hour) on 1 April 2026, agreed between the Estonian Employers’ Confederation and the Trade Union Confederation. A full-time employee on the minimum wage costs an employer roughly €1,266 per month once social tax and employer unemployment insurance are added. If you have staff at or near the floor, the increase applies from the April payroll run - we adjust contracts and payroll before it becomes a back-payment.
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.
Outsourced Payroll, In-House, or an EOR?
Companies hiring in Estonia usually choose between three models. They are not interchangeable, and the right one depends mainly on whether you already have an Estonian entity.
| In-house | Outsourced payroll | Employer of Record | |
|---|---|---|---|
| Estonian entity needed | yes | yes | no |
| Who employs the staff | you | you | the EOR |
| Typical cost | software plus staff time | fixed monthly fee per company | a percentage of salary, or €400-700 per employee |
| Liability for filings | yours | yours, prepared by us | the EOR’s |
| Sensible when | you have in-house payroll expertise | you have an OÜ and want the filings correct | you are testing Estonia with no entity |
An EOR makes sense before you have a company - it employs people on your behalf and you never touch TSD. It stops making sense once you have an Estonian OÜ, because you are then paying a per-employee margin for filings your own accountant can prepare for a fixed fee. Most e-resident and international companies that come to us are at exactly that switching point.
In-house is genuinely cheaper at scale, provided someone on staff follows the Employment Contracts Act, tracks rate changes, and is available every month. Below roughly ten employees that person is usually the founder, and payroll is the task that slips.
Payroll Deadlines in Estonia
| What | When |
|---|---|
| Employment register entry for a new hire | before the first working day |
| Payslip to the employee | before payday, on request at minimum |
| TSD declaration for the previous month | 10th of the following month |
| Payroll taxes paid to the Tax Board | 10th of the following month |
| Annual income statement to employees | 15 February |
Missing the 10th brings interest at 0.06% per day on the unpaid amount - 21.9% a year - charged from the day after the due date until the debt is settled (Taxation Act § 115). The failure we see most often is not the declaration itself but the employment register entry: it has to exist before the person starts, and it cannot be backdated quietly.
What Payroll Costs
Payroll is billed neither per payslip nor per employee: it is inside the monthly package, up to the number of employees the package names - Start up to 2, Standard up to 10, Pro up to 50. A company with four employees is therefore on Standard, from €349 a month, with no separate per-employee fee. Full tiers are on the pricing page.
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.
Who Runs Your Payroll
Payroll is handled by Maria, our chief accountant - over ten years in Estonian tax accounting, working in Estonian, Russian and English, in Merit Palk and Merit Aktiva. You deal with the same person every month, not a rota.
Payroll rarely stands alone. If you are also registering for VAT or filing KMD, see VAT and tax compliance; at year end, payroll data feeds the annual report. New to this - start with how we work.
Sources: Estonian Tax and Customs Board, 2026 tax rates and calculation of basic exemption; minimum wage from 1 April 2026 per the tripartite agreement between the Estonian Employers' Confederation and the Estonian Trade Union Confederation; interest on arrears per Taxation Act § 115. Checked 29 July 2026.