A team finishes a project in October. Management confirms a EUR 500 gross bonus, but payroll transfers it with November salary. Which month belongs in the accounts, and which in TSD? Using one date for both creates two common errors: an unrecorded liability at month-end or a tax declaration for money that has not yet been paid.
I am Dmitri Schmidt, head of AccRes. The example assumes an Estonian employment contract, a resident employee, a fixed written decision on 26 October 2026 that creates an unconditional EUR 500 entitlement, and payment on 6 November. This is ordinary pay for work. It is not a board fee, a prize awarded independently of work, a benefit in kind, or a profit-linked bonus. The agreement and the point at which entitlement becomes binding matter more than the label on the payslip.
Establish what the employee has earned
Employment Contracts Act § 29 deals with monetary pay and agreed benefits. A cash supplement promised for work belongs in payroll, not in the gifts or fringe-benefits schedule. Keep the contract, bonus plan or binding decision, the EUR 500 amount and the agreed pay date. An internal idea to offer a bonus later does not by itself prove that a fixed liability exists now.
A share of the employer's profit, turnover or another business result has a specific rule in § 30; do not assume it follows the fixed project-bonus example. § 33 governs pay timing. Check the contract and bonus terms before delaying an amount that has already become due.
Book the liability when it becomes real
Under Accounting Act § 5, transactions are recorded on an accrual basis when they occur, regardless of cash movement. If the 26 October decision creates an unconditional EUR 500 obligation, recognise bonus expense and a payable to the employee in October. Accrue the related employer payroll costs in the same accounting period, using the actual employee's circumstances to calculate them.
§ 6 requires a source document for the entry. Retain the decision, payroll calculation and November bank record. If the target is still conditional or the award amount has not been fixed, the project-end date alone does not establish an exact EUR 500 payable. Reassess the entitlement before posting it.
Report the bonus in the month cash is paid
Income Tax Act § 13(1) includes supplements for work in wage income, while § 40(2) requires withholding when payment is made. Here that is 6 November. EMTA TSD guidance confirms that TSD is cash based and payments to resident individuals are declared on Annex 1. The November payment belongs in November's TSD, due the following month; an October accrual does not move it to October's TSD.
Social Tax Act § 2(1)(1) covers cash wages and other pay to employees. At the ordinary § 7(1) 33% rate, the EUR 500 gross bonus adds EUR 165 social tax if November's other salary already exceeds the monthly social-tax minimum and ordinary Estonian coverage applies. Net pay also depends on the month's other wages, tax-free income and applicable unemployment-insurance and funded-pension contributions. EUR 500 gross is not a promise of EUR 500 in the bank.
Reconcile the payable to the November payslip
Before filing, compare the October gross-bonus decision, the amount actually paid in November, and the November payslip. Clear the October payable on payment; do not post the same EUR 500 as a second expense in November. Document any change to the amount or payment date and adjust the entry if needed.
This timeline does not determine when every annual bonus must be accrued. A contingent target, a profit-linked entitlement, cross-border employment or a nonresident payee needs its own review. The recipient here is an Estonian resident; a nonresident may instead be reported on TSD Annex 2.
I look for three dates in a bonus file: when the entitlement became binding, when payment was due, and when the bank transfer happened. They need not fall in one month.
Separate the employee's claim from the cash transfer. In this fixed-bonus example, the EUR 500 liability is recognised in October's books, while November's payment is reported on November's TSD Annex 1. The same EUR 500 is not an expense twice. Calculate net pay and employer charges on the full payment-month payroll.
If your bonuses cross month-end or employees have different terms, contact AccRes. We can reconcile decisions, payslips and TSD before filing.