If you operate your company in Estonia on a permanent basis and are a tax resident there, the following principles apply to employee salary payments.
When and how much to pay
You can pay yourself an employee salary based on the terms agreed in an employment contract. Salary is paid on a monthly basis.
To receive an employee's salary, an employment contract must be signed between you and your company, covering your role and contribution to the business.
Please note that if you plan to distribute dividends, you are also expected to pay yourself a reasonable salary for your active involvement in the company. For more details, see the Xolo FAQ article Why do I have to pay salary when I pay dividends?.
Salary payment process
- Sign an employment contract (digitally) before the first salary payment. We can share a potential draft, or you can search for a suitable option HERE.
- Based on the contract, we will register you in the Estonian Employment Register.
- Make the salary payment from the company account, indicating ‘Employee salary’ in the payment description.
- Ensure that the transaction details are available to us no later than the 5th day of the following month.
- We will calculate and declare the applicable taxes and inform you of the amounts and deadlines. Taxes must be declared and paid by the 10th of the following month. Timely payment is important, as late payments are subject to interest (0.06% per day).
Board member remuneration differences
- Enables flexibility - there's no requirement to pay a minimum salary each month, in contrast to an employee salary, which has a minimum of €886 (€946 gross per month starting from 1st of April 2026), and failing to pay this triggers an additional social tax payment of €292.38 per month (€270.60 until Dec 31, 2025)
- No unemployment benefits (in contrast to an employee's salary)
- Social security in Estonia is granted with a minimum of €886 (€820 until Dec 31, 2025) paid as board member salary and/or employee salary (gross amount).