If your expanding business operations mean you need to hire additional support, there are two main types of contractual arrangement.
If the person has a legal entity in Estonia (OÜ or FIE), your company can hire him/her as a subcontractor
If the person does not have a legal entity in Estonia, your company can hire him/her as an employee, either full-time or part-time
In the first case, he/she operates formally as a subcontractor and issues invoices (under the name of his/her legal entity) for the services provided to your company. You might want to have a written contract with his/her legal entity to agree the terms and conditions of the cooperation, but there’s no need to register it in any official registry in Estonia. No additional fees are imposed by LeapIN.
In the second case, he/she operates formally as an employee of your company. That means you need a written employment agreement with him/her (we’ll provide the template) at the beginning of your cooperation. Based on the data from the employment agreement we register him/her in the official Employment Registry of Estonia.
Your company pays him/her a salary to remunerate the services provided. As he/she works in Estonia, all taxes on the salary are declared and paid in Estonia. You can use a standard calculator to determine the total tax amount your company has to pay. LeapIN prepares the salary payments according to the agreement, you execute the payments and we declare the relevant taxes in Estonia.
We’ll notify you when to pay the taxes and how much. Taxes in Estonia are paid on a monthly basis. For example, if you pay an employee salary in May, the relevant taxes will be declared and paid by June 10th.
If you decide to terminate your employee’s agreement, please inform us of the termination date and the further conditions you agreed on. We’ll notify the local authorities accordingly and let you know about any final payments to be taken care of. In the case of subcontractors, there’s no need to inform us nor local authorities about the termination.
Can I employ foreign nationals with tax residence outside Estonia on my payroll?
No. The most convenient option for your business would be subcontracting the necessary freelancer resources.