The TSD is the single monthly return that carries almost every Estonian company tax that isn’t VAT: payroll, board fees, fringe benefits, dividends, hidden profit distributions, and non-business expenses. Its eight annexes decide which of those a given payment lands in, and getting the wrong annex — or missing that one applies at all — is one of the most common paperwork mistakes founders running an Estonian OÜ make.
The short answer
The TSD (income and social tax return) is due by the 10th of the month following the payment; a company that made no declarable payment in a given month has nothing to file that month.
The TSD has eight annexes, numbered 1 through 8, each reporting a different type of payment — from resident salaries (annex 1) to maritime income (annex 8).
For a typical one-person e-Residency company, only a handful matter in practice: annex 1 (payroll), annex 4 (fringe benefits), annex 6 (non-business expenses), and annex 7 (dividends and hidden profit distributions).
Annex 4 costs income tax 22/78 plus social tax 33% on top — the most expensive route to move value out of the company.
Annex 6 and annex 7 both cost 22/78 on the taxed amount, same as a normal dividend.
Declaring a dividend on the TSD and actually paying yourself the dividend are two separate events — the TSD is where the tax obligation becomes official, not the bank transfer itself.
What is the TSD and who has to file it?
The TSD is Estonia’s income and social tax return, filed monthly with the Estonian Tax and Customs Board (EMTA). It is the form that discloses payments a company made during the month that trigger income tax, social tax, or both — payroll, board member fees, fringe benefits, dividends, and a short list of other reclassified payments. Every Estonian company that makes at least one such payment in a given calendar month must file it. The Estonian Tax and Customs Board publishes the current Estonian rates and rules.
There is a precise nuance founders miss: a company with nothing declarable in a month has nothing to file that month. If your OÜ paid no salary, no board fee, no dividend, no fringe benefit and had no non-business expense in, say, March, there is no TSD obligation for March. This is different from VAT, where a VAT-registered company files a KMD every month regardless of activity. The TSD is event-driven, not calendar-driven.
When exactly is it due?
The TSD is due by the 10th of the month following the month the payment was made in. Pay a dividend in July, and the TSD (with annex 7 attached) is due by 10 August. If the 10th falls on a weekend or public holiday, the deadline shifts to the next working day — the same shift rule EMTA applies across its filing calendar.
Who actually files it?
In practice, the company (via its accountant, or a service like Enty) files the TSD electronically through EMTA’s e-service. A single-owner OÜ with no employees will typically only ever touch it in the months a dividend, board fee, or reclassified payment occurs — which for many lean e-Residency companies means several quiet months with no TSD at all, followed by one filing around a dividend distribution.
What are the TSD annexes, and what does each one report?
The TSD itself is a short cover form; the actual detail sits in its annexes, numbered 1 to 8. Each annex is a separate schedule for a distinct category of payment, and a single month’s TSD can carry more than one annex if, say, you paid both salary and a dividend. The table below is the complete list.
Annex | What it reports | Who typically files it | Rate |
|---|---|---|---|
1 | Payments to resident natural persons — salary, board fees, withheld income tax, funded-pension and unemployment-insurance contributions | Any company with resident payroll or board fees | 22% income tax + 33% social tax (see annex 1 note below) |
2 | Payments to non-resident natural and legal persons, and to contractual/joint-stock investment funds, with tax withheld | Companies paying non-resident contractors, directors or funds | Varies by treaty and payment type |
3 | Profit taken out of a permanent establishment of a non-resident legal person; a credit institution’s advance income tax on profit | Non-resident companies with an Estonian branch; credit institutions | 22/78 |
4 | Fringe benefits (erisoodustus) — company car for private use, health/sport benefits above the exemption, other in-kind perks | Companies giving board members/employees taxable perks | Income tax 22/78 plus social tax 33% |
5 | Gifts, donations, and reception/representation expenses beyond the tax-free allowance | Companies with entertaining/gifting beyond the exemption | 22/78 on the excess |
6 | Expenses and payments not related to business | Companies with personal spending on the company card | 22/78 |
7 | Dividends and other profit distributions, payments of equity, and controlled-foreign-company income | Any company distributing profit, or with a reclassified hidden distribution | 22/78 |
8 | Income from international maritime transport services | Shipping companies only | N/A — sector-specific regime |
EMTA’s own English-language list of TSD annexes stops at annex 8. There is no ninth annex, and nothing in EMTA’s published guidance suggests one is coming — if you see a source citing a higher number, it is wrong.
Which annexes does a one-person company actually meet?
Most of the eight annexes are edge cases for a typical lean Estonia company run by a solo founder. Annexes 2, 3, and 8 deal with non-resident payment structures, permanent establishments, and maritime transport — situations a standard e-Residency OÜ rarely if ever encounters. The four you should actually understand well are annexes 1, 4, 6, and 7, plus annex 5 if you entertain clients or give gifts beyond the exemption.
Annex 1 — the moment you put anyone (including yourself) on payroll or pay a board member fee.
Annex 4 — the moment a board member or employee gets a benefit in kind, most commonly private use of a company car.
Annex 5 — reception and representation costs above €50 per calendar month plus 2% of that month’s social-tax-liable payroll, or gifts beyond the exemption.
Annex 6 — the moment personal spending lands on the company card and isn’t genuinely business-related.
Annex 7 — the moment a dividend is declared, or a related-party loan gets reclassified as a hidden profit distribution.
How does the payroll annex work?
Annex 1 reports payments to resident natural persons — salary and board member fees — along with the income tax, funded-pension contribution, and unemployment-insurance premium withheld from them. Salary carries the full payroll stack: 22% personal income tax (after the €700/month basic exemption), 33% social tax paid by the employer on top of gross, plus 1.6% employee / 0.8% employer unemployment insurance and 2% funded pension where applicable.
A board member fee is reported on the same annex but taxed slightly differently: social tax applies, but unemployment insurance does not, because a board member is not legally an employee for unemployment-insurance purposes. The mistake founders make here is assuming a board fee is a lighter-touch, tax-free way to pay themselves — it still carries income tax and 33% social tax, it just skips the unemployment-insurance layer.
What triggers annex 4 — fringe benefits — and why is it the most expensive?
Annex 4 is triggered whenever the company gives an employee or board member a benefit in kind because of that relationship — most commonly a company car available for private use, health or sports benefits above the tax-free ceiling, or other non-cash perks. It is taxed at income tax 22/78 plus social tax 33% on top of the grossed-up value, which makes it the single most expensive way to move value out of an Estonian company — more expensive than a dividend and, in most cases, more expensive than salary.
The 2026 company-car example makes the cost concrete: private use of a car is valued at €1.96 per kW per month of the vehicle’s power (€1.47 per kW if the car is over five years old). A 90 kW car produces a €176.40 monthly benefit, which works out to roughly €117 in combined tax every single month the car stays available for private use.
The mistake founders make with annex 4 is treating a benefit as informal and undocumented — letting a company car double as the family car without ever running it through payroll. EMTA does not require intent to evade; the benefit is taxable the moment it exists, documented or not, and skipping the annex simply leaves an unreported liability sitting on the books.
What triggers annex 6 — expenses unrelated to business?
Annex 6 captures spending that hits the company card or accounts but isn’t genuinely related to running the business — the classic case being personal purchases charged to the OÜ. Estonian law works from an exhaustive list rather than a broad definition: statutory fines and penalties, acquiring rights or assets unrelated to the business, and services or purchases unrelated to what the company actually does. The taxed amount is charged at 22/78, and if a purchase is only partly personal, only the non-business portion is taxed.
The mistake here is the small, repeated one: a personal subscription, a family trip billed as a business trip, a gadget with no documented business use. Each individually looks trivial; on the books, and eventually to EMTA, it is a pattern of undocumented non-business spending that annex 6 exists specifically to catch.
What triggers annex 7 — dividends and hidden profit distributions?
Annex 7 covers two very different-looking events that share the same tax treatment: an ordinary declared dividend, and a hidden profit distribution — most often a loan to a shareholder, parent company, or group member that EMTA concludes was never really meant to be repaid. Both are taxed at 22/78 on the net amount, both are declared on annex 7, and both are due by the 10th of the following month.
For a straightforward dividend, the mechanics are simple: the company pays 22/78 corporate income tax on the net distribution (€1,000 net costs €281.82 in corporate income tax), and the owner may separately owe personal tax at home, since a treaty relieves double taxation but never produces zero. The mistake founders make with hidden distributions is assuming a loan avoids tax entirely just because it isn’t labelled a dividend — EMTA looks at substance (no repayment deadline, a balance that keeps growing, no dividend policy) and taxes it as a dividend anyway, at the moment EMTA notices, on money the owner has usually already spent.
Paying yourself a dividend and declaring it on the TSD are two different events — the bank transfer moves the money, but annex 7 is what makes the tax obligation official.
How does the TSD connect to INF 14 and loans to related parties?
Loans to related parties are reported twice, on two different forms, for two different reasons. INF 14, part IV discloses loans granted to and repaid by a parent company, sister subsidiaries, and group shareholders or members, plus interest on them — filed quarterly, by the 20th of the month following the quarter. That is purely a disclosure; it doesn’t by itself trigger tax.
Annex 7 of the TSD is where the tax actually gets charged, and only once EMTA (or the company itself, proactively) concludes a specific loan should be reclassified as a hidden profit distribution under the substance-over-form test. In other words: INF 14 is the radar that shows EMTA these loans exist and is filed routinely whether or not anything is wrong; the TSD annex 7 is the bill that arrives only if a specific loan looks like a disguised dividend. A company can file a clean INF 14 every quarter for years and never trigger annex 7, provided the loans are genuinely repaid on commercially sensible terms.
Is paying a dividend the same as declaring it?
No. Paying a dividend is the bank transfer from the company account to the owner. Declaring a dividend is filing annex 7 of the TSD by the 10th of the following month, which is the step that formally establishes the €22/78 corporate income tax liability with EMTA. Founders sometimes transfer money to themselves, call it a dividend informally, and only file the TSD annex weeks later — or forget to file it at all, on the assumption that the payment itself is the declaration.
Treat the two as sequential, not simultaneous: decide and document the distribution (a shareholder resolution is standard practice), transfer the funds, then file annex 7 with the TSD covering the month of payment, by the 10th of the month after.
How does a TSD payment actually get processed by EMTA?
Every EMTA tax payment — TSD included — goes into the taxpayer’s single prepayment account, one holding account per registered company. Money paid before the due date sits in the account and is automatically applied to the liability early on the due date itself. Once a due date has passed, unpaid balances are swept three times a day (01:00, 10:30, 18:30), oldest liability first, so a late payment doesn’t simply vanish into a queue — it is actively applied as soon as it lands.
Pay before the 10th: the payment is held and applied automatically on the due date.
Pay after the 10th: the payment is swept into the oldest outstanding liability at the next scheduled sweep.
A payment with a specific reference number (an interest claim, a fine) is applied immediately on receipt.
Refunds and overpayment requests are only released once every due obligation is already covered.
What happens if the TSD is correct but the payment is late?
A correctly filed TSD with a late payment still triggers late-payment interest, calculated at EMTA’s standard statutory rate of 0.06% per day, which works out to roughly 21.9% per year. This interest is separate from the declaration itself being right or wrong — filing on time and paying late still costs money, it just avoids a filing penalty on top.
It is worth being precise about which late interest is which, because founders sometimes conflate the two. EMTA’s 0.06%/day statutory late-tax-payment interest applies specifically to overdue tax liabilities like an unpaid TSD balance. It has nothing to do with commercial late-payment interest under the Law of Obligations Act, which is a contractual remedy between two business parties for a late invoice payment, runs on a different formula, and has no relationship to EMTA at all. Confusing the two — assuming a supplier-contract interest clause somehow applies to a tax debt, or vice versa — is a real source of confusion in Estonian business forums.
EMTA late-tax-payment interest | Law of Obligations late-payment interest | |
|---|---|---|
Applies to | Overdue tax liabilities (e.g. unpaid TSD balance) | Overdue commercial invoices between two parties |
Rate | 0.06% per day (~21.9%/year) | Set by contract or statutory default, unrelated to EMTA’s rate |
Who charges it | EMTA, automatically | The unpaid creditor, per the contract or the Act |
Can it be reduced | Up to 50% off once EMTA approves an instalment plan | Governed by contract terms, not EMTA |
If a company genuinely cannot pay a TSD liability on time, EMTA can grant an instalment-payment plan, which comes with a reduction of up to 50% off the standard interest rate — worth requesting before the debt accumulates rather than after.
Frequently asked questions
What is the TSD in Estonia?
The TSD is Estonia’s monthly income and social tax return, filed with EMTA whenever a company makes a payment that triggers income tax, social tax, or both — such as salary, a board fee, a dividend, or a fringe benefit. It is separate from VAT, which is reported on the KMD.
Do I have to file a TSD every month?
No. You only file a TSD for a month in which the company made a declarable payment. A month with no salary, board fee, dividend, fringe benefit, or non-business expense has no TSD obligation at all.
How many annexes does the TSD have?
Eight. EMTA’s English-language list of TSD annexes runs from annex 1 (resident payroll) through annex 8 (maritime transport income), with no evidence of a ninth.
Which TSD annex covers dividends?
Annex 7, which covers both ordinary declared dividends and loans reclassified as hidden profit distributions, both taxed at 22/78 on the net amount.
Which annex applies to a company car?
Annex 4, the fringe-benefits annex, which taxes the benefit at income tax 22/78 plus social tax 33% — the most expensive of the common annexes.
Is a board member fee taxed the same as salary?
Almost. Both are reported on annex 1 and both carry income tax and 33% social tax, but a board member fee skips the 1.6%/0.8% unemployment-insurance contributions that apply to an employee’s salary, because a board member isn’t an employee for that purpose.
Is declaring a dividend the same as paying it?
No. Paying it is the bank transfer; declaring it is filing annex 7 with the TSD covering the month of payment, due by the 10th of the following month. Both steps are required.
How is INF 14 different from the TSD?
INF 14 part IV is a quarterly disclosure (due the 20th of the month after the quarter) of loans to related parties, filed regardless of whether anything is wrong. The TSD’s annex 7 only comes into play if a specific loan gets reclassified as a hidden profit distribution, at which point it is taxed at 22/78.
What happens if I file the TSD on time but pay late?
You still owe EMTA’s standard late-payment interest of 0.06% per day (about 21.9% per year) on the overdue amount, calculated separately from any filing penalty and unrelated to commercial late-payment interest under the Law of Obligations Act.
