Reimbursement of Phone and Internet Expenses for Employees in Estonia

In today's digital work environment, phones and internet access have become indispensable tools for most employees. Estonian legislation allows employers to reimburse employees for phone and internet expenses tax-free, provided these costs are connected to performing work duties. The basis for the tax exemption is business-related use. If an employee uses a personal phone or internet connection for both work and personal purposes, only the work-related portion should be reimbursed. To determine the correct split, it is recommended to establish an internal company policy that sets out the principles of reimbursement. Documentation is key: all reimbursements must be recorded in the accounting records along with the relevant invoices. The company must retain both the mobile operator and internet service provider invoices, as well as internal documents proving the work-related nature of the reimbursement. If the reimbursement does not meet the requirements — documentation is missing, or it is not based on a company policy or employer's decision — the Tax and Customs Board may treat it as a fringe benefit. The employer must then pay income tax (22%) and social tax (33%) on the fringe benefit. It is therefore worth investing in proper documentation and establishing clear internal rules.