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.
Specific details related to employee salary payments, in case you are not an Estonian tax resident, can be found in the Xolo FAQ article ‘How can I pay myself a salary (operating outside Estonia)?’.
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.
From board member remuneration:
- Personal income tax (22%) must be withheld
- Social tax (33%) must be paid by the company to Estonia in case an A1 certificate* is not provided (available before declaring deadline and validity period starting before the payout date).
Please see more details from the Xolo FAQ article ‘How can I pay myself a board member remuneration (operating outside Estonia)?’
*A1 form is a standard document in the European Union, which can be obtained from your local Social Security Office. Please ask your Social Security Office for further information in order to receive the A1 form (formerly E 101).