Changes in law 2023

Minimum wage

From January 1, 2023, minimum wage will rise to 725 EUR per month (in 2022 it was 654 EUR).

Basic exemption of income tax

From January 1, 2023, the basic exemption of income tax will rise to 654 EUR per month (from 2018 to 2022 it was 500 EUR).

Social tax minimum

The minimum social tax in 2023 is EUR 215.82. This is the amount that must be paid monthly for an employee with an employment contract. In the case of other types of contracts, it is the minimum amount that must be paid in order for the employee to have valid health insurance.

Payroll taxes

There will be no changes in salary taxes in 2023. The taxes to be withheld are still 1.6% for the employee’s unemployment insurance premium (except in the case of Board Member’s contract), 2% for funded pension (if the person has joined), and 20% as income tax. In addition, the employee must pay 33% of social tax and a 0.8% unemployment insurance premium (except in the case of a Board Member’s contract).

Donations to Ukraine exempt from income tax

The addition of § 61 of the Income Tax Act allows tax-free donations to be made to Ukraine through associations named in the law in order to create better opportunities for helping the people of Ukraine in a war.

A resident legal person shall not pay income tax on the donations and gifts made in order to preserve the territorial integrity and sovereignty of Ukraine and to provide and organize targeted humanitarian aid if the donations and gifts are made from February 24, 2022 to December 31, 2022 to the following legal persons:

  • MTÜ Eesti Pagulasabi;
  • MTÜ Mondo;
  • Ukraina Kultuurikeskus;
  • Riigikaitse Edendamise Sihtasutus;
  • Eesti Punane Rist;
  • Päästeliit;
  • Rotary Klubi Tallinn Vanalinn.

Temporary employment during the period of registration as unemployed

Temporary employment during the period of registration as unemployed, i.e. a workbit, means an employment period overlapping the period of registration as unemployed. From September 1, 2020, it is possible for people registered as unemployed to be temporarily employed while looking for a full-time job without terminating their registration as unemployed due to this employment. This allows jobseekers to be professionally active until they find a new full-time job. Since the maximum permitted gross salary is related to the minimum wage, it rises to EUR 290.00 in 2023 (40% of the minimum wage). Please see the detailed conditions here: Amendments to the law in 2020.

Mandatory subcontracting chain and fixation of the time spent on construction sites

For the construction sector, the law prescribes a mandatory determination of the subcontracting chain and the fixation of the time spent on construction sites. The main obliged person is the main contractor, who, in addition to the obligation to identify the subcontractor, also has the obligation to confirm the construction works covered by the reporting obligation, based on the pre-filled data, in the online platform of the Tax and Customs Board, and to submit the data of the Client who ordered the construction works.

Amendments to the Taxation Act § 25 prim 10 to 15 will enter into force from October 1, 2023. More details are available here (in Estonian):

Reservation of a company business name in the e-Business Register

A legal or natural person can reserve the business name of a company in the business register for 6 months by paying a state fee of EUR 150. The law will be adopted on February 1, 2023 but you can actually reserve a business name through the new technical solution from March 1, 2024.

Incapacity for work benefits returned to pre-COVID-19 times

From July 1, 2023, the scheme for reimbursing sick leaves will be changed back to the scheme used before the pandemic. This means that an employee’s deductibles apply to the first three days of an illness, the employer pays the benefit from the fourth to the eighth day of illness (reimbursing 70% of the employee’s salary), and the EHIF pays the benefit from the ninth day of illness.

Imposing a fine for failure to submit an annual report

From Feb 1, 2023 the Commercial Register Act enters into force, that changes the rules for imposing fine for failure to submit annual report The registrar may impose the fine without making a warning order and, repeatedly until the annual report is submitted. The following things must be taken into account while imposing a fine:

  • how many times an annual report has not been submitted on time;
  • the length of time that has elapsed since the due date for submitting the annual report;
  • other significant circumstances known to the registrar.

The fine is set to the extent stipulated in the Code of Civil Procedure, but not less than 200 euros. According to the Code of Civil Procedure, a fine of up to 3,200 euros can be imposed. It is also possible to impose a repeated fine if the obligation is not fulfilled.

Submitting an annual report without the board or without shareholders

With the amendments in the Commercial Code, the possibility of submitting the annual report also changes. If a dispute has arisen between the shareholders that makes it impossible for them to approve the report by the deadline, the management board can submit it without approval. This means the report will carry a public notice that it has not been approved. However, this does not mean that the approved report should not be submitted – when the dispute is resolved and the shareholders agree upon submitting the report, it must be done through a repeated report. This prevents possible fines for failure to submit a report and/or the threat of the forced deletion of the company.

If the company has no management board, the report can also be submitted by the sole shareholder or the majority shareholder, as the board would have been appointed by them.

Reinstatement to register

If the company has been deleted from the register due to failure to submit an annual report and not because of a liquidation process, it is possible to reinstate the company to the register. The period between deletion and reinstatement can be no longer than three years.

Obligation to provide information on digital platforms

Operators of digital platforms (websites, mobile applications) are obliged to provide information about sellers of goods and services. The information must be collected by December 31, 2023, and the deadline for the first report is January 31, 2024.

The following data must be collected:

  • sale of goods (materials only);
  • rental of real estate (for example, accommodation, parking space rental, etc.);
  • provision of personal services (for example, babysitting, courier service, etc.);
  • any type of transport rental.

The operator of the digital platform is obliged to withhold and declare payroll taxes on the active income earned by natural persons (who have not registered as an FIE). Failure to meet the requirements may lead to the blocking of the platform’s website.