Employer-paid work-injury damages carry income tax only, filed as type 32

An employer that pays an employee compensation for health damage caused by a tööõnnetus or kutsehaigus must treat the payment as taxable employment income when the payment is not made as an insurance benefitEmta. The recipient is the employee who suffered the work-related health damage; the payer is the employer, not an insurer. Tulumaksuseadus § 13 lõige 1 taxes kahjuhüvitis paid for health damage from a work accident or occupational disease unless it is paid as kindlustushüvitisenaRiigiteataja.

The employer must withhold income tax from the compensation when it is paid to a resident natural personEmta. Tulumaksuseadus § 41 punkt 1 requires withholding from salary and other remuneration subject to income tax under § 13 lõiked 1, 5 and 6 that is paid to a residendist füüsilisele isikuleRiigiteataja. Payroll therefore applies the ordinary withholding mechanism to this class of damages, in the same way as to other taxable salary payments, rather than paying the amount gross.

No social tax, unemployment insurance payment or funded pension payment is charged on the compensationEmta. The three levies that normally accompany salary — the employer's social tax and unemployment contribution and the employee's unemployment and kogumispensioni contributions — do not apply to this paymentEmta. Only income tax is withheld and accounted forEmta.

The payment is declared separately from ordinary wages. Ordinary palgatulu is declared on form TSD lisa 1 with payment type 10. Compensation for work-accident or occupational-disease health damage paid by the employer is declared on TSD lisa 1 with payment type 32Emta. Using type 32 identifies the income-tax-only treatment and keeps the employer's monthly filing consistent with the withholding applied.

In practice, payroll must distinguish two cases before posting. Where an insurer pays the benefit as an insurance benefit, the § 13 lõige 1 charge described here does not apply. Where the employer itself pays kahjuhüvitis for the health damage, the employer withholds income tax, omits the other payroll levies, and files the amount under type 32Emta. The distinction matters for employment-injury settlements, top-up payments alongside insurance, and correction runs where a payment first posted as salary must be reclassified.

The legal basis is Tulumaksuseadus § 13 lõige 1 and § 41 punkt 1, with declaration on TSD lisa 1 under payment type 32Emta.