Salary tax check

Before submitting the annual report, make sure that the balances of salary taxes (income tax, social tax, unemployment insurance premium and funded pension II pillar) are correct. The tax accounting balances must match the data submitted to the Estonian Tax and Customs Board (EMTA).

If you have calculated salaries to employees (both under an employment contract and a contract under the law of obligations), you must ensure that both the salary and the related taxes are correctly marked as paid.

Each salary calculation is linked to two payments:

  • salary payment
  • tax payment

When paying taxes to the Tax Board, the tax amount is first recorded on an interim account (1520 Prepayment account for taxes), and on the tax due date the tax liabilities are settled from the prepayment account.

Ensure that all monthly tax closing entries are saved under Reports -> TSD report. The TSD report displays data according to the month in which the payment was made.

Example
If the salary for September is paid out in October, it will appear in the upper section of the October TSD report. The taxes are declared and paid to the Tax Authority by November 10, and the corresponding tax closing entry is reflected in the lower section of the November TSD report.

Check the accrual-based tax position as of the end of the financial year in the Tax Board’s data and compare it with the data recorded in the program.

When the salary is paid in the same month it is calculated

At the end of each month, the tax liability account should reflect only that month’s tax amounts. The accuracy of these balances can be verified directly from the balance sheet.

If you notice any differences, open the main ledger and review the data:

  • ensure that all tax closing entries are recorded
  • check that the opening balance of the account is correct
  • verify that no incorrect entries have been posted to the account
When the salary is paid in the month following the calculation month

If the salary is paid in the month following the calculation month, the tax liability account at month-end will include taxes for two months. To compare with the Tax Board’s data, open the corresponding tax main ledger and check the balance before the last salary entry.

Example
We are checking balances as of 31.12.2024.
The salary calculation entry for December is dated 31.12.2024, but for comparing the tax balances, the main ledger should be checked as of 30.12.2024. This amount must match the balance in the Tax Board’s data.

If you notice any differences, open the main ledger and review the data:

  • ensure all tax closing entries are recorded
  • check that the account’s opening balance is correct
  • verify that no incorrect entries have been posted to the account

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