Estonia Employer Payroll — TSD Declaration & Net-Pay Computation

Gather all data needed to run payroll accurately for each employee. Estonia requires knowing II-pillar membership status (mandatory for those born after 31 Dec 1982), the elected pension rate (2%, 4% or 6%), whether a basic-exemption (maksuvaba tulu) application has been filed with the employer, the employee's age band (pensionable age affects unemployment-premium liability), and the contractual employment type (employee vs board member vs FIE).

Compute employee net pay and employer total cost for each person using current Estonian statutory rates. For 2026: PIT flat 22%, employee unemployment 1.6%, II-pillar contribution 2%/4%/6%, basic exemption EUR 700/month flat. Employer on-costs: social tax 33% (minimum base EUR 886/month in 2026) plus employer unemployment 0.8%. Board members do not attract unemployment premiums.

Prepare Form TSD (Tööjõukulude deklaratsioon) with its annexes for submission to EMTA. Annex 1 covers employment income (wages, board fees); Annex 2 covers fringe benefits (erisoodustus). All withheld income tax, social tax, both unemployment premiums and funded-pension contributions from the payroll period are consolidated into one TSD liability figure.

Submit the TSD declaration and pay the consolidated liability to EMTA by the 10th of the month following the payroll month. Estonia uses a single EMTA prepayment account — one bank transfer covers income tax withheld, social tax, both unemployment premiums and the funded-pension contribution. Late payment attracts statutory interest of 0.06% per day under the Taxation Act.

Reconcile the EMTA bank debit against the declared TSD liability and close the payroll period. Confirm the funded-pension contribution has been routed correctly to Pensionikeskus (this flows automatically via EMTA). Retain all payroll records for the statutory retention period. Flag any II-pillar rate elections or exemption application changes effective next month.