State to close loophole in maternity and redundancy tax benefits ({{contentCtrl.commentsTotal}})

The state will close a loophole which meant those who gave birth later in the year were treated unequitably in the taxation of their benefits. The same applies to redundancy money.
The state will close a loophole which meant those who gave birth later in the year were treated unequitably in the taxation of their benefits. The same applies to redundancy money. Source: Ben Grey/Creative Commons

Those claiming redundancy or maternity benefit will be able to defer part of their taxable benefits to the following year, from year-end 2019. The change is aimed at removing a situation where recipients were seeing their tax-free income for the year reduced at different rates, for instance in the case of women who give birth later on in the year.

For instance, a person who claims maternity benefits for two months in December will be able to carry one month's-worth over to the next year, for tax purposes, and the same applies with redundancy payments. This will allow redundancy and maternity payments to be taxed as if they were received on a monthly basis, according to ERR's online Estonian news.

"This [current] situation is certainly not fair to those became parents at the end of the year, and it is now being resolved as a matter of urgency," said a spokesperson for finance minister Martin Helme (EKRE).

The change is also to apply retrospectively from Jan. 1, 2018. For tax purposes, the transfer of the benefit requires submission of a tax return by the individual, both for the transfer of the benefit and for taxation of that part carried forward, it is reported.

There were 2,204 recipients of maternity benefit in Q4 2018, and the average benefit paid by the Health Insurance Fund (Haigekassa) stood at a reported €5,518 for 140 days.

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Editor: Andrew Whyte

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