From January 1, 2019, minimum wage will rise to 540 EUR per month (in 2022 it was 500 EUR). The minimum hourly wage rate is 3.21 EUR gross.
The minimum social tax in 2019 is EUR 165. This is the amount to be paid monthly for a contracted employee, and for any other contract it is the minimum amount to be paid to get valid EHIF insurance.
There will be no changes in salary taxes in 2019. The taxes withheld from gross salary are, as earlier, 1.6% for employee's unemployment insurance (except management board members’ contracts), 2% for funded pension (if subscribed to the funded pension) and 20% for income tax. In addition, the employer must pay 33% for social security tax and 0.8% of the company's unemployment insurance contribution (except for the management board member's contract).
Good news for e-residents! Due to the amendment to the Commercial Code, the obligation to pay share capital is not limited to Estonian banks anymore, but may also be made to a bank established in another member country of the European Economic Area.
From 1 January 2019, employment without a job title and workplace address must be amended in the current data in the Employment Register. The official title and workplace address shall be added to the existing valid entries by 30 April 2019 at the latest.
This applies only to employees working under an employment contract.
Here are some ways to determine the workplace address:
More details are available at: Instructions on how to determine the address of the workplace
From 1 January 2019, regularly payable dividends will be taxed at 14% or 14/86 of the net amount of the dividends (16.28%) according to the amendment of the Income Tax Act. This means that a resident company will be able to both apply a lower (reduced) tax rate of 14/86 and a standard tax rate of 20/80.
A resident company will be able to apply a lower (reduced) tax rate of 14/86:
If the company's annual sales to individuals in the other EU member states are less than EUR 10,000, the MOSS special scheme is not applied. This means that once a company has applied for the MOSS special scheme, it can now apply for termination. However, it should be noted that the company will not be able to apply for the MOSS special scheme again within 6 months of the termination request.
In addition, the principle of invoicing will change in the case of using the MOSS special scheme. Whereas until now the invoice has to be issued according to the rules of the country of destination, from 2019 the taxable person applying the special scheme will only follow the invoicing rules of his country of registration.
As of 1 January 2019, an amendment to Directive 2006/112/EC on vouchers, aimed at simplifying, updating and harmonizing the VAT rules applicable to vouchers (i.e. vouchers as a gift card), will be in force in the European Union. Consequently, vouchers are divided into two: single-purpose vouchers and multi-purpose vouchers.
It is necessary to clarify and distinguish between the concepts of single-purpose and multi-purpose vouchers as they have different VAT logic. Whereas until now voucher invoices were always issued without VAT, and VAT was charged and paid, when the goods were redeemed or the service was provided, the logic here is now twofold.
because the taxation of a voucher is different, depending on whether the sales of the voucher-related goods or services can be taxed at the time the voucher is issued or only when the voucher-related goods or services are transferred.
A voucher is single-purpose, when the place of supply of the goods or services related to the voucher and the amount of VAT payable on that good or service are known at the time the voucher is issued (For example, entry to a particular spa, always charged 20% VAT). A multi-purpose voucher is a voucher other than a one-purpose voucher (For example, a gift card for a bookstore, where you can buy both 9% and 20% VAT products).
If a single-purpose voucher is sold by the company itself, it is already considered to be a sales of goods or a supply of services, i.e. VAT has to be added to the invoice. However, if the company sells the multi-purpose voucher itself, the goods will not be sold and the service will not be provided (VAT is not known, as the customer may purchase products at different VAT rates). Thus, a multi-purpose voucher is subject to VAT on the supply of goods or services related to that voucher.
If a single-purpose voucher is transferred by a person acting on behalf of another person (intermediary), the turnover of the sale of goods or provision of the service relating to the voucher shall be attributed to the person on whose behalf the person who transferred the voucher is acting. The other person shall consider the turnover of the goods or services related to the voucher to have taken place on the date of receiving the payment for the voucher or redemption of the voucher, whichever is the earliest.
If a company uses IFRS, the obligation to recognize all lease contracts as finance leases becomes effective from 1 January 2019, with only rare exceptions for very small and short term leases. However, this applies only to those companies that report their financial statements in accordance with IFRS; there is no change in Estonian financial reporting standards.