Estonian taxation system is considered to be simple and liberal. Compared to most European countries, the major difference is that income tax has only one general flat rate. Direct taxes are withheld from the salary automatically by the employer.
Direct taxes are:
- income tax
- unemployment insurance
- funded pension payment
Income tax is 20%, and there is a monthly unemployment insurance tax of 1,6%, which is deducted from your salary by your employer.
A funded pension payment is withheld from your salary at a rate of 2%, if you have joined the optional funded pension system.
Read more about taxation from Euraxess website.