Estonia Payroll Services

At Bradford Jacobs, we navigate the administration of the Estonian payroll system for you. We do the work, so you do not have to.

Estonian Payroll

The Baltic state of Estonia has a diverse, modern market economy and a welcoming outlook towards foreign investment. The Republic of Estonia may be on the northeast fringe of Europe but has developed a central role with the major European institutions.

Tallinn city, Estonia. Snow on trees in winter.

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Estonia is the first country to offer e-Residency, an ID that is issued by the government and is available worldwide for individuals to start and run their business wherever their location, using Estonia’s tailored digital business services.

These are among the attractions that draw international corporations to Estonia’s economy – however, there are inevitably challenges and it is essential that foreign companies make the right moves from the first day. Complying with tax filing, payroll regulations, social insurance and employee rights in Estonia is still a testing workload.

  • Remote payroll – This option allows businesses to operate under a single payroll system, by adding employees in Estonia to your parent company’s payroll. However, these employees must operate under different regulations, which is likely to cause problems.
  • Internal payroll – You may operate payroll for your subsidiary, especially if you are committed to growing your company’s presence in Estonia. However, this does require hiring dedicated HR staff who understand Estonian employment and compliance laws.
  • Estonias’ payroll processing company – If you are considering outsourcing, then working with a Estonian payroll company will help in processing your payroll – but not when it comes to compliance.
  • Estonias’ payroll outsourcing – However, there is another option available that solves both concerns – by working with Bradford Jacobs. We can handle payroll and compliance for all your employees in Estonia. We take the administrative stress off your shoulders so you can focus on what you do best.

The Estonian economy is a tempting target for international companies planning to expand their operations – with the bonus that the country’s membership in the European Union widens the horizon of opportunities even further.

These opportunities come with challenges – and payroll management is one of the trickiest. Whether your company is planning to move staff abroad or hire employees in the new territory, you cannot afford to tumble over barriers in Estonia’s payroll and income tax landscape – it will cost you time and money.

Foreign companies have the option of opening a legal entity in Estonia, with the most popular choice being a private limited company, known as an osaühing, or OÜ and operating under the Commercial Code. It is the favoured choice both for Estonian residents and e-Residents; an ID that is issued by the government and is available worldwide for individuals to start and run their business wherever their location.

Taking this step before running payroll in Estonia requires detailed practical knowledge of the company, tax, and employment law, and staying up to date with taxation rates.

However, there is an alternative and simpler route. Bradford Jacobs’ will navigate around these potential pitfalls effectively and efficiently.

Outsourcing payroll in Estonia will streamline your operations by dealing with the following:

  • All employees – Estonian, European Union (EU), European Economic Area (EEA) and non-EU and non-EEA – must be registered in the Employment Register and with the Estonian Tax and Customs Board.
  • Registration is through the e-Tax Board or at a Tax and Customs Board Office.
  • The Employment Register is used for providing information to the Health and Insurance Fund, the Police and Border Guard Board and the Social Insurance Board.
  • To register, employees must have an Estonian ID card before starting work; if registering temporarily using their date of birth, they must have an ID card within five days.
  • Employees must be registered at the latest when they start work.
  • Information for the Employment Register must include Employee’s ID details; employer’s details and registry code; date of starting work and, if relevant, end date.
  • Register employees with the Tax and Customs Board. Employers supply non-tax resident data on TSD Annex 2, and for tax residents on TSD Annex 1.
  • Individuals change tax residency by submitting Form R.
  • Employees are automatically registered for the Health Insurance Fund and the Social Insurance Board once they have been entered into the Employment Register.
  • Employees from EU/EEA nations will be exempt from social insurance contributions if they produce an A1 Certificate from their home country’s social insurance organisation.

International companies taking the step of opening a legal entity in Estonia to hire staff and run payroll, typically opt for a subsidiary private limited company, known as an osaühing, or OÜ operating under the Companies Act regulated by the Commercial Code. Registration procedures include:

  • A unique name for the company after checking availability on the e-Business Register.
  • A legally registered Estonian address, or else locate through the e-Residency Marketplace.
  • Registration of the company through the Company Registration Portal.
  • File parent company’s Articles of Association and Certificate of Registration.
  • Draft subsidiary’s Articles of Association.
  • Fee of €265 (US$288) paid through the registration portal along with any share capital, although this can be deferred to later.
  • Confirmation from the registration portal that the application has been accepted.
  • Registration of employees on the Employment Register via the website of the Tax and Customs Board.
  • Required licenses depending on the area of business activities, checked with the Register of Economic Activities.
  • Registration for Value Added Tax (VAT) if necessary, with the Tax and Customs Board.

Note: Estonians holding an ID card, or an e-Residency card can establish a private limited company online. This also applies to an increasing number of ID cards from fellow European Union member states.

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