Paying yourself as the founder of an Estonian OÜ: board fee, salary and social tax

The owner-manager of an Estonian private limited company (OÜ) usually sits on its management board. You can take a board member fee (juhatuse liikme tasu), a salary under an employment contract, dividends, or nothing at all. Each choice has its own taxes, and the board fee decides whether you have Estonian health insurance. This guide explains the rules for 2026.

In short

• No law obliges an OÜ to pay its board member, but record an unpaid role in writing.
• A board fee carries 33 percent social tax, 22 percent income tax and the funded pension, but no unemployment insurance and no minimum.
• In 2026 the minimum monthly social tax base is 886 euros. A board fee below it is lawful, but it gives no health insurance.
• The basic exemption is 700 euros a month in 2026, and you can apply it to a board fee.
• The company declares the fee on the TSD for the month of payment, by the 10th of the next month.
• Board work cannot be moved to an invoice from your own sole proprietorship or company.

Must an OÜ pay its board member?

No. The shareholders, or the supervisory board if there is one, decide whether the board member gets a fee and how much (Commercial Code § 180^1(1)). The fee must be in reasonable proportion to the duties and to the company's financial situation (§ 180^1(2)). A sole shareholder who is also the sole board member signs the resolution alone.

The board member contract is not an employment contract (Employment Contracts Act § 1(5)). It is a contract of mandate. A mandate is presumed to be paid when it would reasonably be done only for payment, and a reasonable fee is due if no amount was set (Law of Obligations Act § 627). So write "the board member receives no remuneration" in the resolution or the contract if the role is unpaid.

An unpaid role means no taxes and nothing to declare. It also means no Estonian health insurance through the company (Health Insurance Act § 5(2), clause 4).

Two common mistakes:

• Operational work without pay. Work that is expected only for pay is presumed to be employment (Employment Contracts Act § 1(2)). Even unpaid work in the company's interest must be entered in the employment register (Taxation Act § 25^1(5)).
• Irregular payments with no resolution. Any money paid to a board member for the role is taxed as a board fee (Income Tax Act § 13(2)). Replacing pay for real work with an arrangement whose only purpose is to avoid tax can be taxed by its real economic content (Taxation Act § 84).

How is a board member fee taxed, compared with a salary?

A board fee carries social tax, income tax and the funded pension. A salary carries the same, plus unemployment insurance, a minimum social tax and the minimum wage.

On a board fee paid to a tax-resident person:

• Social tax of 33 percent of the gross fee, paid by the company on top (Social Tax Act § 2(1), clause 4, and § 7(1)).
• Funded pension of 2, 4 or 6 percent, withheld at the rate the person chose, if the person is in the scheme (Funded Pensions Act § 6, § 7(1) and § 9).
• Income tax of 22 percent, withheld after the pension contribution and, on written application, the basic exemption (Income Tax Act § 4(1), § 13(2) and § 42).
• No unemployment insurance. A board member to whom the Employment Contracts Act does not apply is not insured (Unemployment Insurance Act § 3(2), clause 3).

A salary adds unemployment insurance of 1.6 percent (withheld from the employee) and 0.8 percent (paid by the employer) in 2026 (Tax and Customs Board: tax changes 2026; the premium is due on wages, Unemployment Insurance Act § 40). The Government kept these rates for 2027 to 2030 (regulation of 18.09.2026). Social tax on a salary is due on at least the monthly minimum base (Social Tax Act § 2(2)), and the salary for full-time work cannot be below the minimum wage set by the Government (Employment Contracts Act § 29(5) and (6), Government regulation).

An example for 1,000 euros gross in 2026, with a 2 percent pension rate and the full 700 euro exemption:

Try your own figures in the salary calculator.

Register first. A paid board member must be in the employment register of the Tax and Customs Board no later than the moment the paid role starts (Taxation Act § 25^1(4), clause 3, and § 25^2). An unpaid board member appears only in the Business Register (Board guidance).

What is the minimum social tax, and does it apply to a board fee?

The minimum monthly base is 886 euros in 2026, so the minimum social tax is 292.38 euros a month (State Budget Act 2026 § 2). The base is set in the state budget each year, and it cannot be lower than the minimum wage in force on 1 July of the year before (Social Tax Act § 2^1).

The base works in two different ways:

1. For an employee, it is an obligation. The employer pays social tax on the actual salary, but on at least the base (Social Tax Act § 2(2)). The law reduces it only in set cases, such as work that starts or ends during the month (§ 2(3)), and exempts some people, such as a pensioner (§ 2(4)).
2. For a board member, it is a threshold. The company pays social tax on the actual fee only, with no top-up. But the board member is insured only if social tax of at least the base is paid for them in the month, all companies together (Health Insurance Act § 5(2), clause 4). In practice the gross fee must be at least 886 euros a month in 2026.

The minimum wage and the base are not the same figure in 2026. The minimum wage rose to 946 euros on 01.04.2026 (Government regulation), while the base stays at 886 euros for the year. Raise a round board fee in January, when a new base takes effect.

Does a board fee give Estonian health insurance?

Yes, if you live in Estonia and at least the minimum social tax is declared for you in the month. Three conditions apply:

1. Residence. Only a person who lives in Estonia on a permanent basis, or under a residence permit or right of residence, or who stays and works here lawfully, can be insured (Health Insurance Act § 5(1)). An e-resident who lives outside the EU is not insured in Estonia, even when the company pays social tax on the fee.
2. The minimum. Social tax of at least the base must be paid for you in the month (§ 5(2), clause 4).
3. The declaration. Cover starts after the Health Insurance Fund receives the data of the declared social tax from the Tax and Customs Board (Health Insurance Act § 8). A fee paid on 25 February is declared on the February TSD, due on 10 March. Filing early starts cover sooner.

If a month falls short, cover is suspended one month after that month's TSD due date, and it resumes the day after the Fund receives data that the minimum was met again (§ 8(3) and (4)). The 14-day waiting period applies to employees, not to board members (§ 6).

A board member who lives in another EU or EEA state or in Switzerland, and who is subject to Estonian social security, may get healthcare in the home state at the cost of the Estonian Fund (Regulation (EC) No 883/2004, article 17). Ask the Fund before you rely on it.

How does the basic exemption work on a board fee?

The basic exemption is 8,400 euros a year in 2026, or 700 euros a month, whatever your income (Income Tax Act § 23(1)). The company deducts it from a board fee exactly as from a salary.

• The company deducts at most 700 euros a month, and only on your written application (Income Tax Act § 42(1)).
• With several payers, you apply to one payer only (§ 42(2)). A person paid by two group companies chooses one of them.
• The order is: gross, minus the employee's unemployment insurance (a salary only), minus the pension contribution, minus the exemption, then 22 percent (§ 42(5) and (6)).

The annual income tax return is due by 30 April (Income Tax Act § 44). An exemption you did not use during the year comes back as a refund, and an over-use is charged. Since 2026 the exemption no longer shrinks as income grows, so dividends from an Estonian company no longer affect it (Tax and Customs Board).

How and when is the board fee declared?

The company declares the fee on the monthly TSD for the month in which it pays it, and pays the taxes by the 10th of the next month (Income Tax Act § 40; Social Tax Act § 9(1), clause 4).

The month of payment counts, not the month of work. A March fee paid on 3 April is an April item, due on the TSD of 10 May. This also decides in which month the minimum for health insurance is met. A fee that is only accrued and never paid is not taxed and gives no cover.

Late tax bears interest of 0.06 percent a day, from the day after the due date to the day of payment (Taxation Act § 115(1) and § 117(1)). The amount of income tax withheld from a resident for a year cannot be reduced after 15 February of the next year (Income Tax Act § 40(5)).

Can you be board member and employee at once?

Yes, if the employment covers work other than managing and representing the company, for example as a developer or a salesperson. Board duties cannot be done under an employment contract (Employment Contracts Act § 1(5)), but other work under the company's direction is presumed to be employment when it is expected only for pay (§ 1(2)). You then need two contracts, with a clear split of duties and pay.

• The salary carries social tax on at least the base, unemployment insurance, the funded pension and income tax (Social Tax Act § 2(2)). Pay for full-time work cannot be below the minimum wage set by the Government (Employment Contracts Act § 29(5) and (6), Government regulation).
• The board fee is taxed as above.
• The basic exemption is applied once: at most 700 euros in the month for both payments together (Income Tax Act § 42(1) and (2)).
• The employment register holds two entries, one for each role (Taxation Act § 25^1(4)).
• Health insurance comes from an employment contract of more than one month after a 14-day waiting period (Health Insurance Act § 5(2), clause 1, and § 6).

So a founder who only wants health insurance usually pays a board fee of at least the base, rather than a salary that must reach the higher minimum wage for full-time work.

Can you invoice your own OÜ instead?

Not for the board role. Pay for managing and representing the company is a board fee in law (Income Tax Act § 13(2); Social Tax Act § 2(1), clause 4). A board member must be a natural person (Commercial Code § 180(2)).

An invoice from your sole proprietorship (FIE) or your own company for "management services" that are in fact the board role carries a high risk:

• Business income of an FIE must come from independent economic activity (Income Tax Act § 14(2)), while pay for the board role is a board fee in law (Income Tax Act § 13(2)).
• An arrangement made to avoid tax is taxed by its real economic content, as a board fee (Taxation Act § 84).
• A sham contract that hides a board fee is disregarded, and the hidden fee is taxed (Taxation Act § 83(4)).

A real, separate service, sold under a written contract at market price, can be invoiced. Keep the board role paid, or explicitly unpaid, beside it. The entrepreneur account is for sales of goods and services only, and a board fee does not belong there.

Is a board fee taxed in Estonia when you live abroad?

Yes. A fee for the board duties of an Estonian company is taxed in Estonia even if you do the work abroad (Income Tax Act § 29(2)). E-residency does not make you tax resident. Residence depends on a home in Estonia or a stay of 183 days in 12 months (Income Tax Act § 6(1)).

• The company withholds 22 percent income tax. A resident of an EEA state may apply for the monthly basic exemption; a resident of a third country cannot (Income Tax Act § 42(1)).
• The company pays 33 percent social tax, unless an A1 certificate shows that another state's social security applies (Social Tax Act § 2(1), clause 4; Regulation (EC) No 883/2004, articles 11 to 13).
• No funded pension is withheld, because only residents contribute (Funded Pensions Act § 6).
• You get no Estonian health insurance if you live outside Estonia (Health Insurance Act § 5(1)).
• The company registers you in the employment register before the paid role starts, with your foreign identification (Taxation Act § 25^1(4)).

Your home state may tax the fee too. The tax treaty between Estonia and your home state decides how double tax is relieved (Tax and Customs Board: tax agreements). Which state's social security applies to you depends on the facts, so ask your home state's institution for an A1 decision first. For residence and permanent establishment questions, see founder residency.

General information, not advice for your situation. The law as in force on 30.09.2026.