Deductions upon withholding of income tax

(1) On the basis of a single written application of a taxpayer, one-twelfth of the basic exemption provided for in § 23 shall, before calculation of the income tax to be withheld, be deducted in each calendar month from the payments specified in clauses 41 1), 3), 6), 7) and 12) which have been made to the resident natural person.

(1¹) In the case of a pension paid to a resident natural person by the Estonian state pursuant to an Act and a mandatory funded pension provided for in the Funded Pensions Act, increased basic exemption for pensions (§ 23²) in the amount of that pension shall, before calculation of income tax to be withheld, be deducted from the pension, although this deduction shall not exceed one-twelfth of the amount provided for in § 23² in each calendar month.

(1²) In the case of payment of compensation for an accident at work or occupational disease made to a resident natural person, increased basic exemption for compensation for accidents at work and occupational diseases (§ 23³) in the amount of that compensation shall, on the basis of a single written application from a taxpayer, be deducted from the payment before calculation of income tax to be withheld, although this deduction shall not exceed one-twelfth of the amount provided for in § 23³ in each calendar month.

(2) If a recipient of payments receives taxable income from several withholding agents, the deduction specified in subsection (1) may only be made by one withholding agent chosen by the taxpayer.

(2¹) Before calculation of the income tax to be withheld, the portion of basic exemption specified in subsections (1) and (1¹) of this section which has not been used for withholding income tax from a pension paid pursuant to an Act may be deducted from the mandatory funded pension. Before calculation of the income tax to be withheld, the portion of basic exemption which has not been used for withholding income tax from payments made on the basis of a pension contract provided for in the Funded Pensions Act may be deducted from the payments from mandatory pension fund.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

(2²) In order to calculate the basic exemption provided for in subsection (2¹) of this section, the registrar of the Estonian Central Register of Securities, the Social Insurance Board and insurers entering into pension contracts shall exchange data pursuant to the procedure established by a regulation of the Minister of Finance.
[RT I 2008, 48, 269 - entry into force 14.11.2008]

(3) If payments subject to income tax are not made to a taxpayer in each month or if the payments made in some of the months are smaller than one-twelfth of the basic exemption provided for in § 23, 23² or 23³, the same withholding agent has the right to carry the unused part of the deduction of basic exemption specified in subsection (1), (1¹) or (1²) for such months forward to the subsequent months of the same calendar year. When pension paid by the Estonian state pursuant to Acts and the mandatory funded pension provided for in the Funded Pensions Act are paid to a resident natural person, the basic exemption specified in subsections 42 (1) and (1¹) can be calculated in total from the beginning of the calendar year.
[RT I 2005, 25, 193 - entry into force 01.07.2005 - second sentence of subsection (3) applied retroactively as of 1 January 2005]

(4) [Repealed - RT I, 18.11.2010, 1 - entry into force 01.01.2011]

(5) The unemployment insurance premium withheld pursuant to clause 42 (1) 1) of the Unemployment Insurance Act from a payment made to a natural person in accordance with § 41 shall be deducted from the payment before calculation of the income tax to be withheld.
[RT I, 18.11.2010, 1 - entry into force 01.01.2011]

(6) The contributions to a mandatory funded pension withheld pursuant to clauses 11 (1) 1) and 2) of the Funded Pensions Act from a payment made to a resident natural person in accordance with § 41 shall be deducted from the payment before calculation of the income tax to be withheld.

(7) The insurance premiums of supplementary funded pension and amounts paid for the acquisition of units of voluntary pension funds for a resident natural person shall be deducted to the extent provided for in clause 13 (3) 15) before calculation of the income tax to be withheld from the amounts paid to the resident natural person, which are specified in clause 41 1). The accounting shall be kept in total as of the beginning of a calendar year.
[RT I, 29.03.2012, 1 - entry into force 30.03.2012]

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