Estonian Payroll and the TSD Declaration (2026)
Any Estonian employer — OÜ, AS, FIE, branch, non-profit — with a person on payroll files a TSD declaration each month. TSD reports income tax withheld, social tax, unemployment insurance and funded-pension contributions in one form, filed with EMTA by the 10th of the following month. Board-member fees, contractor engagements with natural persons, and fringe benefits land on the same form. Missing a month triggers interest from day one and, on repeat, an EMTA compliance check plus Sotsiaalkindlustusamet follow-up.
Who files TSD
Any entity that pays wages, board-member fees, rent to a natural person, dividends, royalties, contractor fees, or fringe benefits files TSD. That includes OÜs with a working shareholder-director paid any salary, non-resident employers registered for payroll in Estonia, Estonian branches of foreign companies, and non-profits with employees.
A pure holding OÜ with no salaried director and no board-member fee does not file TSD — but the moment the director is paid anything or a fringe benefit is extended (company car, uncompensated loan), the TSD duty begins the following month. We see this trip-wire regularly on dormant-looking OÜs that funded a director's travel or a year-end bonus.
Rates: what you pay on €1,000 gross
Personal income tax on wages is 22% and is withheld from gross. Social tax at 33% is employer-paid on top of gross with a minimum monthly base (approximately €820 in 2025 → €271/month floor) that applies even if the actual salary is lower — the floor bites on part-time, bonus-heavy, or seasonal arrangements. Unemployment insurance is 0.8% employer and 1.6% employee (Töötukassa). Funded pension (II pillar) is 2% of gross for standard enrolment, withheld from the employee, or 4%–6% where the employee has opted into higher contribution.
From 1 January 2026 the security tax introduced under recent legislation adds 2% on top of personal income — plan payroll budgets accordingly. Board-member fees are subject to income tax and social tax but not unemployment insurance or funded pension. Fringe benefits (erisoodustused) carry a separate computation: the employer pays the income tax and social tax at grossed-up rates, and the charge lands on TSD line 5.
Filing and what we do
TSD is filed through e-MTA by the 10th of the following month; the payment settles via EMTA's unified pre-payment account. We run payroll in Merit Palk, SmartAccounts or your system, compute gross-to-net including pension opt-ins and Töötukassa rates, handle fringe benefits, file the TSD XML by the 5th, and push the payment instruction to you. We register new employees in Töötamise register before their first day — that entry drives Sotsiaalkindlustusamet coverage, not TSD itself.
For cross-border cases we also handle A1 certificate applications, assess the social-insurance split under EU Regulation 883/2004, and coordinate with the receiving country. Board-member-only OÜs get a minimum-salary or board-fee-only configuration depending on substance and tax objectives.
Frequently asked
How much does €1,000 gross cost an employer in 2026? About €1,338 — €1,000 plus 33% social tax (€330) plus 0.8% unemployment (€8). The employee receives about €778 after 22% income tax, 1.6% unemployment and 2% II-pillar. Figures shift with the 2026 security tax and pension-pillar choice.
How do I file TSD in Estonia? Through e-MTA by the 10th of the following month. The form consolidates income tax withheld, social tax, unemployment insurance and funded-pension contributions; supporting annexes cover dividends, fringe benefits and non-resident payments. We prepare the XML from payroll, file it, and forward the payment instruction.
Do I need to register employees before they start? Yes — entry in Töötamise register is required before the first working day. The register drives Sotsiaalkindlustusamet health-insurance activation and feeds Töötukassa unemployment-insurance records. Missed registrations leave employees without active health insurance — we catch this during onboarding.