sotsiaalmaksu

Sotsiaalmaks is the Estonian term for the social tax, a payroll tax collected in Estonia to fund the country’s social security system. It is levied on gross wages and salaries and is paid by employers, not by employees. The tax is typically remitted to the Estonian Tax and Customs Board on a monthly basis.

The rate of sotsiaalmaks is 33 percent of the employee’s gross remuneration. This money funds the state pension system, health insurance, and other social protection programs. By funding health insurance, the social tax helps finance public health services and access to medical care for residents. It is distinct from personal income tax, which is paid by employees, and from other payroll contributions that may apply to specific situations.

In practice, almost all standard employment relationships fall under the sotsiaalmaks regime, with the employer bearing the administrative responsibility for calculation and payment. The rules are enacted by national legislation and administered by the tax authority, with penalties for late or incorrect payments.

Over time, sotsiaalmaks has been a central element of Estonia’s efforts to modernize its tax and social security systems, aligning payroll obligations with broader reforms to promote economic efficiency while ensuring funding for pensions, health care, and social benefits. Changes to the rate or scope of the tax are implemented through legislation and public fiscal policy.