Social Security Matters
In short: a permanent resident of Estonia – or a person living in Estonia on the basis of a temporary residency permit or right of residence – for whom their employer must pay social tax is an insured person.
The social tax is paid at a rate of 33% on all payments made to a foreign employee for salaried work performed in Estonia. The social tax is your responsibility as an employer: it is not capped and you must pay it in full.
Take note: in order for your employee to be covered by the Estonian Social Insurance scheme, the minimum social tax obligation you have to remit on a monthly basis is 165 euros (2019). This is also the case when your employee is working part time and the actual amount of social security calculated from their gross income is less.
Entry of an Estonian ID number in the Employment Register = prerequisite for social-security coverage in Estonia
The Estonian Health Insurance Fund uses Employment Register data to determine employee eligibility for Estonian social security coverage and to grant health insurance benefits to foreign employees.
Only when your foreign employee is employed for less than 5 days, are they not entitled to any social benefits.
Start date of health insurance coverage
Insurance coverage for foreign employees will commence after a waiting period of 14 days. This period is counted from the employee’s first day of work as entered in the Employment Register.
Exemption from paying the social security contributions in Estonia with respect to foreign employees
In order to be exempted from social security obligations in Estonia, the EU/EEA nationals posted to Estonia or their employer from an EU/EEA country should apply for an A1 certificate from their home country’s social security agency prior to their assignment in Estonia.
If the employer has an A1 certificate, the social security contributions (e.g. social tax, unemployment-insurance premiums and funded pension payments) will not be paid or withheld in Estonia. (An A1 certificate may bring additional registration obligations for the employer in the employee’s home country state registries.)
Estonia has social-security agreements with Canada and Ukraine, and similar principles apply in the case of EU/EEA and Swiss nationals.
EU/EEA nationals who are posted to Estonia from an EU/EEA country should apply for an A1 certificate from their home country’s social-security agency.
An A1 certificate is usually issued for up to 2 years. During this time, the employee will be covered by their home country´s social security regime.
If the employee’s assignment in Estonia lasts for more than 6 months, the employee and/or employer should apply for an E106 Certificate / S1 form – and a European Health Insurance Card from the Estonian Health Insurance Fund’s nearest office. This will ensure that the foreign employee has the right to receive medical treatment equal to that of their Estonian counterparts. The E106 Certificate / S1 form must be registered with the Estonian Health Insurance Fund.
Additional information about Estonia’s social security and the A1 form is available on the website of the Estonian Social Insurance Board.
Non-EU/EEA nationals who are posted to Estonia from a non-EU/EEA country will automatically become members of the Estonian social security program (unless a reciprocal agreement on social security is in place between Estonia and the employee´s home country).
Estonia has social security agreements with Australia, Canada, Russia (covering pension aspects only) and Ukraine.