Contractor vs employee rate (Estonia)
Compare an Estonian B2C (employee) take-home against the B2B (contractor through an OÜ) invoice needed to match it after vacation, sick days, public holidays, and lost employer benefits. Side-by-side comparison of three OÜ tax models: salary, dividends, and hybrid.
The B2C take-home you currently have or would accept. Hourly and daily are computed against billable days for apples-to-apples comparison with the contractor side.
Sports club, health top-up, equipment, training, etc.
Accounting, software, hardware amortisation, insurance.
Default €886 keeps state benefits.
How each assumption moves the numbers
- Benefits, overhead, hybrid salary, pension — change the annual / monthly target (you need more or less income overall).
- Vacation, holidays, sick days, hours/day — redistribute the same annual target across fewer or more billable days, so daily and hourly rates move while annual and monthly stay the same.
| Tax model | Annual | Monthly | Daily | Hourly |
|---|---|---|---|---|
Salary through OÜ Pay yourself a salary through the OÜ. Same payroll stack as B2C: 33% social tax, 1.6% / 0.8% UI, 22% income tax, optional pension. Full state health and pension coverage. Highest tax burden of the three. | €40,177 | €3,348 | €187 | €23.36 |
Dividends only OÜ retains profit, distributes as dividends taxed at 22%. No social tax, no employee unemployment, no pension contributions. No state health insurance unless paid separately. Highest take-home if you can absorb the lost benefits. | €32,329 | €2,694 | €150 | €18.80 |
Hybrid (€886 salary + dividends) Pay the minimum salary to maintain state health and pension coverage; distribute the remainder as dividends. Most common arrangement for solo Estonian OÜs. | €33,724 | €2,810 | €157 | €19.61 |
The highlighted row is the hybrid mode — the most realistic real-world model for solo Estonian OÜs that want to keep state benefits.
Dividends-only mode does not include state health insurance or pension contributions. Add the cost of voluntary health coverage to the overhead field if you go this route.
Hybrid mode assumes the minimum-salary portion fully qualifies for state social benefits. Below €886/month gross the social tax floor kicks in and the effective cost grows; set hybrid salary at least to that to stay above the floor.
VAT is ignored. Once the OÜ crosses the €40k/year turnover threshold it must register for VAT, which adds compliance overhead but is generally pass-through for B2B work.
This tool is for orientation only. For anything load-bearing, talk to an Estonian accountant — corporate-tax rules around regular vs. non-regular dividends, related-party transactions, and minimum-salary social-tax obligations all have edge cases not modelled here.