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Amount of Subsidy and Labour Taxes

Prindi

Lisatud 11.05.2020

The Estonian Unemployment Insurance Fund subsidizes salaries in the sum of up to €1000. Is that the net or gross pay?

The subsidy is calculated in gross sums. The Unemployment Insurance Fund will withhold personal income tax, unemployment insurance premium and mandatory funded pension contributions from that sum.

How is the sum of the subsidy calculated, if an employee has worked for the company for less than 12 months?

The subsidy is calculated on the basis of data from the Tax and Customs Board. Only payments from which the unemployment insurance premium has been withheld will be taken into account. We base our calculations on salary data from the past 12 months. We will take into account the salary from the nine months before the last three months, divided by 270. This way, the average daily salary will be calculated and then multiplied by 30, giving us the sum of the average monthly salary. We will pay 70% of that last sum as subsidy.

Does the employer need to pay social tax based on the set monthly social tax rate?

No. The Estonian Unemployment Insurance Fund will pay the social tax on the subsidy, the employer will pay social tax on the salary they pay. If the employee’s average salary, based on which the subsidy is calculated, is less than the set minimum wage and the employer pays them a salary of 150 euros, the Fund will pay social tax in a sum up to the minimum monthly rate.

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