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HomeEstoniaEstonian tax authority: Cash-in-hand pay should be declared too

Estonian tax authority: Cash-in-hand pay should be declared too

In the context of the findings of a recent poll by the job portal CV. ee, according to which a large percentage of residents is ready to do additional seasonal work without a contract and without paying tax, the Estonian Tax and Customs Board pointed out on Tuesday that all payouts must be declared, and submitting false information in one’s tax return is punishable.

Every year, at the beginning of the seasonal work season, the Tax and Customs Board works closely with professional associations, event organizers and other organizations to pay attention to the registration of seasonal workers. It also conducts oversight, with more than 1,300 labor tax-related contacts last year.

“We estimate the amount lost due to cash-in-hand wages at 113.6 million euros, of which 92.2 million is taxes partially not paid and 21.4 million is the result of untaxed pay,” said Marc Malter, chief labor tax officer at the Tax and Customs Board.

He stressed that both the employer and the employee are responsible for the tax obligations incurred by knowingly accepting undeclared pay.

“Receiving cash-in-hand wages does not exempt the recipient from paying income tax. If the employer has not declared the wages, the individual must do so themselves through their personal income tax return. Providing false information on the tax return can result in a fine of up to 1,200 euros. Furthermore, those who accept cash-in-hand wages risk not receiving sickness, redundancy, and unemployment benefits; their future pension will be smaller due to unpaid taxes, and in potential labor disputes with the employer they will always be at a disadvantage,” Malter said.

“We believe that working together, we can make Estonia more tax-compliant, and this will better safeguard our economic environment. Most of us pay taxes, because it is normal and dignified,”  the official added.

An express survey of the Estonian labor market carried out by the job portal CV.ee shows that nearly 30 percent of those surveyed have done or are willing to do seasonal work informally if they could get more money, while 23 percent of respondents are skeptical about getting paid cash-in-hand.

The main reasons for working without a job contract are related to economic security and flexible working hours. Almost 65 percent of respondents would be willing to work without a contract if they could get paid more as a result, and 54 percent if they could choose their own hours and place of work. A package of attractive fringe benefits would also be an incentive to work informally, named by 33 percent, while 22 percent said that the possibility of traveling on the job could be a motivator.

The most popular fields for additional work were customer service with 40 percent, tourism and hospitality with 23 percent, and transport and logistics with 19 percent. People are looking to earn up to 1,000 euros net per month from extra work.

“The results reveal the sad reality that a significant portion of the workforce is willing to risk potential legal consequences associated with unregistered work for better pay and flexibility,” said Karla Oder, marketing manager at CV.ee. “This study highlights a critical issue in the current labor market — the tendency of job seekers to pursue informal work to increase their income and balance financial instability.”

Source: BNS

(Reproduction of BNS information in mass media and other websites without written consent of BNS is prohibited.)

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