Taxation of fringe benefit costs in Estonia

For example

Price of fringe benefit (for example housing expenses) 1000 euros

Income tax 250 euros = 1000 x 20/80

Social tax 412,50 euros = (1000 + 250) x 33%

A total cost to employer is 1 662,50 euros = 1000 + 250 + 412,50 payment.

Fringe benefits and expenses not related to business

Fringe benefits are subject to income tax of 20/80 at the employer’s level and social tax at the rate of 33% (social tax is levied on the amount which includes both income tax and non-deductible VAT).


On practical level it is wise to avoid fringe benefit costs at all as it has maximum taxation - similar to payroll taxation. Extra disadvantage is that it increases accounting costs as every additional transaction or documents adds job.