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ESTONIA
Basic principles
The social security system of Estonia comprises 3
contributory insurance schemes:
 health insurance,
 pension insurance,
 unemployment insurance,
and four non-contributory universal schemes:
 State unemployment allowances,
 family benefits,
 social benefits for disabled,
 funeral grants.
Self-employed persons are covered by the general
schemes of health insurance (benefits in kind and in cash
in case of sickness and maternity) and pension insurance
(invalidity, old-age, and survivors) on compulsory base, but
they are not covered by the unemployment insurance
scheme (neither on compulsory base nor may they join the
scheme voluntarily). In respect of unemployment, the selfemployed are however covered by the non-contributory
State unemployment allowance scheme. The other noncontributory schemes are also universal and cover all
residents.
Financing
The pension insurance and health insurance are financed
from social tax, which is paid by employers on behalf of
their employees and by the self-employed at the rate of
33% of the tax base (20 percentage points allocated for
the pension insurance and 13 percentage points for the
health insurance). There are special provisions regulating
the payment of social tax by the self-employed.
According to the Social Tax Act, the social tax base for the
self-employed is defined as income from the
entrepreneurship subject to deduction of documented
proved expenditures which are made directly to obtain this
income. These expenditures may also include social tax on
sums paid by the self-employed to other persons and
training costs deductible from the income taxable with the
personal income tax. The Social Tax Act stipulates a
minimum amount of social tax and a ceiling on the social
tax, which is to be paid by the self-employed (the same
minimum applies also to social tax paid by employers on
behalf of their employees, but there is no ceiling on the
social tax paid by employers).
The amount of social tax to be paid by the self-employed
per working-able insured person cannot be smaller than
the amount of tax calculated from the rate established by
the State in the annual State budget, and shall not be
higher than the amount of tax calculated on the basis of 15
times this rate. In 2012, the monthly rate established in the
State budget is € 278.02. Accordingly, the minimum
amount of social tax to be paid by the self-employed is
€ 91.75 (0.33 x 278.02) per month, while the ceiling is
€ 1,376 (0.33 x 15 x 278.02) per month. In the case of
being simultaneously employed and self-employed, the
minimum amount is applied on the total of wage income
and income from the self-employment.
For the payment of social tax, the taxation period for selfemployed persons is a calendar year (for other tax-payers
it is a calendar month), but the self-employed are required
to pay advance payments once a quarter.
Health care and cash benefits
For benefits under the health insurance, the general
conditions apply both to employees and the self-employed.
However, there are some special rules for self-employed
for taking into account the reference earnings: sickness
and maternity cash benefits for self-employed persons are
calculated on the bases of actually paid tax over the
previous calendar year (in case of employees, average
earnings over the calendar year preceding sickness or
maternity are taken into account).
Invalidity, old-age, and survivors' pensions
Also for benefits under the pension insurance, the general
conditions apply both to employees and the self-employed.
However, there are some special rules for self-employed
for taking into account the reference earnings. In case of
self-employed persons only the amount of social tax
actually paid is taken into account for calculation of the
pension coefficients. In case of employees, the due
amount of social tax to be paid by the employer is taken
into account as the employee is not a tax-payer for social
tax and therefore cannot be held responsible if the
employer has violated his legal obligations.
Family benefits
As the non-contributory schemes cover all residents, the
self-employed are just as any other group both in terms of
financing and benefit sides and there are no special
provisions in their respect.
Unemployment
Self-employed persons are not covered by the
unemployment insurance scheme, but they may be entitled
to the State unemployment allowance scheme. In this
scheme, self-employment is considered equal to
employment in respect of the qualification period for
entitlement to the allowance (the qualification period is 180
days of employment or equalised activity within the 12
months preceding unemployment). As a part of active
labour market policy measures, the unemployed are
entitled to labour market grant up to € 4,474 to start their
own
business,
including
self-employment,
upon
presentation of a business plan.