Violation of work remuneration provisions in Estonia is subject to criminal liability
 on July 12, 2014 concluded its work on the amendments to the Criminal Law,...)
The Parliament of Estonia (Riigikogu) on July 12, 2014 concluded its work on the amendments to the Criminal Law, providing series of changes in the framework of criminal justice.
From January 1, 2015 in the Criminal law is in force Article 3891, establishing criminal liability for concealment of tax liability and unfounded increase of claim for refund. With this amendment concealment of tax liability and tax fraud articles where unified and merged together, setting a criminal liability for the failure to submit or submission of incorrect information regarding the work remuneration to tax authorities.
Criminal procedure and punishment in Estonia
For payment of the work remuneration what is not disclosed to the accounting records, if it is done in by an amount corresponding to or exceeding major damage limit, penalty is imprisonment for a term up to seven years.
Additionally, for payment of the work remuneration what is not disclosed to the accounting records, for a legal person additional pecuniary punishment may be added.
Therefore criminal liability (and a possible punishment) occurs to the employer, who pays the salary for performed work in the “envelope” exceeding the major damage limit – in the amount of hundred minimum wages.
The Riigikogu has also performed related amendments to the Taxation Act, establishing administrative liability (as a misdemeanor) and pecuniary penalty for “envelope salary” in the amount of up to 1200 EUR.
For payment of the work remuneration what is not disclosed to the accounting records, pecuniary penalty for a legal person is up to 32 000 EUR.
Registration of employment in Estonia
From July 1, 2014 it is mandatory in Estonia for all employers to register the persons employed in the employment register. Employments of all natural persons, irrespective of the form of a contract, must be recorded in the employment register.
Failure to comply with the notification obligation first results in a precept issued by the Tax Agency. Failure to follow this precept is highly likely to lead to a fine for a misdeaminor or even criminal charges.
To find out more about remuneration provisions in Estonia, please contact our lawyers at info@gencs.eu
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