A board member may simultaneously receive board member remuneration (for management duties) and an employee salary under an employment contract (for operational duties).
Alternatively, the company’s management may decide to pay only one type of remuneration, depending on the actual nature and scope of the duties performed. The remuneration structure should reflect whether the activities relate to management responsibilities or operational work, and the proportion of time or effort allocated to each.
Employee salary
Employee salary is paid for the active performance of work under an employment relationship.
As of 1 April 2026, the statutory minimum gross monthly salary in Estonia is €946, applicable in the case of full-time employment (previously €886). Health insurance coverage for an employee begins 14 days after the employee is registered in the Employment Register and continues for 2 months after the termination of the employment relationship.
The Estonian Tax and Customs Board expects that the salary paid to an employee corresponds to the average salary in the relevant field in Estonia for similar positions within the same industry.
If no salary payment is made in a particular month, the employer is still required to declare the employee and pay the minimum monthly social tax obligation (€292.38 from 1 January 2026).
If salary is paid later (with a delay), the employer may offset the previously paid minimum social tax amounts against the social tax calculated on the actual salary payment in the month when the payment is made. This ensures that the employee’s social protection and health insurance coverage remain uninterrupted.
From employee salary, the following taxes apply:
- Social tax 33% paid by the employer.
- Employer’s unemployment insurance contribution 0.8% paid by the employer.
- Personal income tax 22% is withheld from the employee’s gross salary. Upon the employee’s written application, a monthly tax-free allowance can be applied. In 2026, the tax-free allowance amounts to €700 per calendar month.
- Employee’s unemployment insurance contribution 1.6% is withheld from the employee’s gross salary.
- Mandatory funded pension contribution (if the employee participates in the second pillar pension system).
Employee salary payments must be declared in the monthly tax return (TSD). The TSD must be submitted by the 10th day of the month following the payment. If the 10th falls on a weekend or public holiday, the deadline is the next working day. All related taxes must also be paid by the same deadline.
It is also important to keep in mind the obligation to have a risk assessment of the working environment that is submitted via the Labour Inspectorate’s self-service environment (TEIS) by all employers who have at least one employee working under an employment contract who is not the board member himself/herself.
Board member remuneration
Board member remuneration is paid to a management board member for performing company management duties. The remuneration must be declared based on actual payments made. If no payment is made, it cannot be declared.
There is no statutory minimum remuneration requirement for board members. The amount of payment is decided by the company’s management.
However, if this remuneration is the person’s only source of income, and the individual wishes to obtain health insurance coverage in Estonia, the company must declare and pay at least the minimum required social tax.
As of 1 January 2026, the minimum monthly social tax amount required for health insurance coverage is €292.38. This is calculated based on the previous calendar year’s minimum gross salary (€886) - €886 × 33% = €292.38. This means that, to ensure health insurance coverage, a board member’s gross remuneration should be at least €886 per month, so that the minimum social tax amount is paid.
From board member remuneration:
- Social tax (33%) must be paid by the company.
- Personal income tax (22%) must be withheld. Upon the employee’s written application, a monthly tax-free allowance can be applied. In 2026, the tax-free allowance amounts to €700 per calendar month.
- Mandatory funded pension contributions must be withheld, if applicable.
The board member is not entitled to unemployment benefits; therefore, neither the employee’s (1.6%) nor the employer’s (0.8%) unemployment insurance contributions are calculated or paid.
Health insurance coverage for a board member arises based on the submission of the monthly tax declaration (TSD). Coverage starts on the 10th day of the month following the payment date (i.e., the payroll date). If the 10th falls on a weekend or public holiday, coverage begins on the next working day. Coverage remains valid until the 10th day of the following month (or the next working day if the 10th falls on a weekend or public holiday).
If the company does not submit the TSD declaration, or no remuneration is paid for a particular month, the board member will not have valid health insurance coverage for that period.