New TSD rules from October 2026: what has changed

This article is based on official guidance from the Estonian Tax and Customs Board (EMTA) regarding the transition of the TSD return to data-based filing (andmepõhine TSD), the guide ‘Submitting the TSD return’ and the list of compatible accounting software. Please check emta.ee for technical details and deadlines.

Quick answer: the key points in 60 seconds

From 1 October 2026, the TSD – the income and social tax return – can be submitted not as a form, but as a data feed from accounting software. The business owner sends data on payments, and the EMTA automatically generates the return from this data and calculates the taxes.

Key facts:

• The deadlines for payment and submission remain unchanged. The TSD must still be confirmed by the 10th of the month following the month of payment.
• The September TSD is submitted in the traditional way. As 10 October 2026 falls on a Saturday, the deadline has been extended to 12 October.
• Payments for October will be processed under the new regulations. The deadline for submitting the TSD for October is 10 November 2026.
• Appendices 1 and 2 have been replaced by a single ‘payroll’ form. This covers both residents and non-residents, as well as payments and refunds.
• Appendices 3–8 remain unchanged for the time being. They will be converted for data transmission in 2028.
• The old XML format is no longer valid. The new file format is XML in the XBRL GL standard; uploading the previous CSV format is supported as a transitional measure until the end of 2027.
• Manual entry into e-MTA remains an option. Switching to the software is not compulsory, but e-MTA strongly recommends doing so.
• The SEB and LHV banking modules are already operating under the new system. For small companies, this is the simplest option.

Below, we explain exactly what has changed, what the new process looks like, what a small e-resident company should choose, and which mistakes are the most costly.

A fork in the road: which submission method applies to you

The EMTA outlines three initial scenarios. The extent of the changes depends on which one applies to you.

Scenario 1. You are already using accounting software with a machine-readable interface. For you, only the technical format of data transfer is changing. The new XBRL GL format is being implemented by your software provider — check that they are on the EMTA’s list.

Situation 2. Your accounts are managed in software, but you upload the TSD as a file or enter it manually into e-MTA. The channel, format and the process itself are changing. The EMTA advises you to activate the machine interface in your software in advance and, if necessary, ask your software provider for assistance.

Situation 3. You do not use accounting software. There are three options: choose a programme that supports the new TSD, use the SEB or LHV payroll module, or use the free state-run e-arveldaja service for start-ups and small businesses. Manual entry into e-MTA remains an option too.

The practical conclusion for a typical e-resident company with a single payment to a board member is that there is no urgent need to purchase anything. However, if an accountant is handling your accounts, check with them which channel the October TSD will be submitted via – and do so by 10 November, rather than on the deadline itself. To find out how to choose an accountant with the right infrastructure, see our guide on how to choose an accountant in Estonia.

What has changed and what has stayed the same

The main shift is a change in approach: the business owner submits data to the EMTA, rather than completed tax returns. Everything else follows from this.

Control over the data remains with the company. The EMTA emphasises that it does not have access to the accounting software, and that the entrepreneur decides when to transfer the data. It is also possible to request the balance of the prepayment account and details of claims from the software.

Transition period and deadlines

The transition is linked to the month of payment, not the date of submission. This is the key point to remember in October–November 2026.

A separate transitional arrangement applies to file uploads. The previous XML format is no longer valid; the new format is XML in the XBRL GL standard. e-MTA will support the upload of existing CSV files until the end of 2027.

The new process, step by step

Step 1. Payment and data transfer

Once salaries or remuneration have been paid, the accountant initiates the transfer of data from the software to EMTA. This can be done immediately, rather than waiting until the end of the month.

Step 2. Feedback from EMTA

EMTA checks the data and returns the result directly to the software: calculated taxes, warnings and errors. You can correct any errors there and then and resubmit the data — there is no need to log in to e-MTA.

Step 3. The tax return is generated automatically

Based on the data received, EMTA generates the tax return. The report is visible in the accounting software.

Step 4. Confirmation

The company or accountant must confirm the tax return by the 10th of the month. Without confirmation, the obligation to submit the return is not considered to have been fulfilled.

A special feature of the LHV banking module

When a salary payment is confirmed via LHV’s online banking, the data is sent to e-MTA via X-tee and pre-fills the TSD. The declaration is automatically confirmed by the TSD deadline if three conditions are met: it was created via an LHV salary payment, it has not been amended in e-MTA, and it contains no errors. If you have made any manual amendments, please confirm the declaration yourself.

What is declared in the TSD in 2026

The new technology does not change the tax rates. The rates your programme must apply to payments in 2026 are:

The tax-free allowance applies only if the employee has submitted an application for it to be taken into account. In 2026, it became a flat rate — the previous scale, which reduced the minimum as income rose, has been abolished. Programmes that continue to calculate using the old formula are making errors in their deductions.

What is important for e-resident companies

Remuneration of a board member. This is subject to 22% income tax and 33% social security contributions, but not unemployment insurance. This also applies to non-residents managing a company from abroad: such payments are included in the combined category of payments alongside those of residents.

No payments — no TSD. If the company has not made any payments or distributions during the month, a tax return is generally not required. This does not exempt the company from submitting an annual report – see the annual report in Estonia.

Dividends and hidden payments. Profit distributions, special benefits, gifts and non-business-related expenses are declared in Annexes 3–8. These are currently still subject to the old rules, and the income tax rate on distributions is 22/78. For more details, see the article Corporate tax in Estonia 2026.

Common mistakes

Submitting the September TSD via the new system. Payments for September are declared under the old rules, with a deadline of 12 October. The new system applies to payments made from October onwards.

Submitting data and forgetting to confirm the return. Sending data does not constitute submission. The return generated by the EMTA must be confirmed by the 10th.

Editing a return created via LHV Bank in e-MTA and waiting for automatic confirmation. Automatic confirmation does not work after manual changes.

Uploading a file in the old XML format. This is no longer accepted. You need XBRL GL or, until the end of 2027, the previous CSV format.

Use the old tax-free allowance scale. From 2026, the allowance will be a flat rate of €700 per month. Outdated programme settings cause errors in every payslip.

Forget about the minimum social security contribution. For part-time work, the employer still pays social security contributions on a minimum of €886 per month, unless an exemption applies.

Waiting until the 10th to spot errors. The new solution allows you to submit data immediately after payment and correct it in advance. The deadline is the worst time for the first submission.

Assume that the changes only apply to large companies. A company with a single board member must submit the TSD in accordance with the same rules.

The infrastructure that makes the system sustainable

The new TSD saves time for those who already keep their accounts in the programme and have accurate data. For everyone else, the transition is an opportunity to get their payroll records in order before KMD and the employment register switch to data transmission in 2027.

Legal Address in Estonia is a project by the licensed corporate services provider eBusiness Solutions OÜ (licence FIU000421), an official member of the e-Residency marketplace. We provide a registered office address and contact person services, forward official correspondence and remind you of EMTA and Commercial Register deadlines. We assist with monthly bookkeeping, tax consultancy and annual reports.

As regards the TSD, this means three things. Payments to board members are declared correctly and on time. EMTA enquiries regarding declarations are not overlooked. And the transition to the new format takes place without the need for last-minute manual adjustments.

Three real-life scenarios

Scenario 1. An e-resident’s company with payments made solely to a board member. The owner lives abroad, receives a board member’s remuneration once a month, and the accounts are managed by an external accountant. Solution: check with the accountant whether their software supports the new TSD; if so, nothing changes for the owner. If the accountant was entering data manually, manual entry into e-MTA is still available, but switching to the software reduces the risk of errors.

Scenario 2. A small team in Estonia without accounting software. Three employees; salaries are paid via online banking. Solution: the SEB or LHV payroll module – data is sent to the EMTA upon payment confirmation. With LHV, the declaration is automatically confirmed on time, provided it has not been amended and contains no errors.

Scenario 3. A growing company with separate payroll accounting. 20 employees, residents and non-residents, bonuses and refunds. Solution: a programme from the EMTA list with a machine-readable interface; data is transferred after each payment, and errors are corrected within a month. For such a company, the benefit is maximised – the need for monthly data transfers between systems is eliminated.

The common factor: the extent of the changes is determined not by the size of the business, but by how your payroll system is currently organised.

What’s next

The new TSD is just the EMTA’s first step towards data-driven reporting. The next stages have already been announced:

• spring 2027 – the VAT return (KMD) and the employment register (TÖR) will switch to data transmission;
• late 2027 – support for uploading the previous CSV file will end;
• 2028 – Annexes 3–8 of the TSD, including profit distribution, will switch to data transmission.

According to EMTA estimates, the transition to data-based reporting could save businesses up to 5 million working hours a year. For companies without suitable software, the government offers digitalisation grants via EIS. If you are a VAT payer, it is worth checking now how the software will handle KMD — see VAT registration in Estonia: when it is required and OSS and IOSS in Estonia.

Mini-glossary

TSD — monthly return for income tax, social tax, unemployment insurance and pension contributions.

Data-based TSD — a data-driven TSD: the company submits payment details, and the EMTA generates the return.

Machine-to-machine interface (masin-masin liides) — direct data exchange between accounting software and the EMTA.

XBRL GL — a data format standard in which TSD files are now uploaded.

X-tee — the Estonian government’s data exchange platform; LHV Bank uses it to submit payroll data to e-MTA.

e-arveldaja — a free government accounting programme for start-ups and small businesses.

KMD and TÖR — VAT returns and the employment register; these will switch to electronic data transmission in spring 2027.

What to do next

1. Ensure that the TSD for September is submitted using the old method by 12 October 2026.
2. Decide on the channel for October payments: software, the SEB/LHV banking module, e-arveldaja or manual entry.
3. Check whether your software is on the EMTA list and activate the machine interface.
4. Check the settings for the €700 tax-free allowance and the minimum social tax.
5. Submit your October data in advance and confirm your tax return by 10 November.
6. Plan your preparations for the KMD based on the data from spring 2027.

This article is for information purposes only and does not constitute tax or accounting advice. Technical requirements for data transmission, transition period deadlines and tax rates are subject to change. Before submitting your return, please check emta.ee or contact our specialists.