Senior citizens living in Estonia have previously praised Ilta-Sanoam for noting that life in the southern neighbor is easier in many ways than in Finland. Katia Salo, who operates as a sole proprietor, however, has the exact opposite experience from Estonia.
A few years ago, the life of 48-year-old Katya Salo was at a real turning point.
Salo, who worked as the managing director of an architectural firm, was burnt to death at work.
After burnout, the taste of the old work was no longer the same, and Salo no longer had the strength to continue it as before.
On top of that, the coronavirus pandemic, which has shut down societies, rolled in.
Tired of everything, Salo decided to change the scenery abroad – after all, he had long dreamed of it.
In early 2021, Salo moved to Tallinn, the capital of Estonia, on a whim.
– Before leaving I just found out that my health care will be in Finland for six months. At that time, I originally intended to stay in Estonia.
Now that journey, which was intended to be a short trip, has dragged on for more than a few years.
This was not the only surprise in the new country of residence.
The biggest surprise for Salo has been the Estonian tax system.
In Estonia, wages are subject to a flat tax, with most citizens paying a 20 percent tax. The flat tax has been reduced slightly for the lowest earners and tightened for higher earners.
It may sound simple, but according to Salo’s experience, the Estonian tax system is anything but.
– It’s at least as complicated as other countries. It has all kinds of exceptions and exceptions and exceptions to others.
The Estonian taxation model is very different from that of Finland. People walking in the Rottermann block in Tallinn in July 2022. Photo: Annie Egren / Lehtikuva
Estonia’s flat tax can be quite straightforward and simple if you are employed or earn well as an entrepreneur.
Then life in Estonia may be easier anyway, because you are entitled to, among other things, the country’s high-quality and affordable health care, which is rated by elderly people living in Estonia interviewed by Ilta-Sanomi as one of the country’s was also exposed. The biggest pluses compared to Finland.
According to pensioners, life in Estonia is in many ways easier than in Finland.
Read more: Three Finns move to Estonia, now tell of shocking departure from Finland: “Life is so easy here”
However, things can get very complicated for a low-income entrepreneur like Salo.
– Then Estonia fell into a pit, the existence of which I had no idea at all.
Secondly, Salo considers the flat tax of 20 percent to be quite high, especially if you compare it with the average Estonian salary.
Currently, the average monthly income of an Estonian is around 1,700 euros, while in Finland the figure is almost double, at 3,300 euros.
Roughly calculated from a monthly income above about 3,000 euros, you will have more money left over from your salary in Estonia after taxes than the same salary in Finland.
– The average Estonian pays significantly higher taxes on his income than the average salary, Salo says.
Katia Salo has lived in Estonia in addition to the capital Tallinn in Haapsalu on the west coast. Photo: Katya Salo
Salo finds the Estonian health care system too expensive for a small entrepreneur like himself who is studying.
In Estonia, healthcare providers are independent operators. The Institute of Health Insurance in Eastin Kela, ie Tarvisakka (formerly Hygekka), is the sole provider of health services and also reimburses the expenses of all service providers.
In Estonia, the care system is based on shared responsibility health insurance, which gives every insured person the right to equal health care.
The employer must pay the so-called social tax, which totals 33 percent of the gross salary. Social Security contributions account for 20 percent, health insurance contributions account for 13 percent.
In order for a sole proprietor to be entitled to health care in Estonia, he must be registered as an entrepreneur. After that, he is bound to pay the same 33 per cent social tax on his gross income based on advance estimates – whether he has income or not.
The payments are clearly higher than, for example, the Finnish entrepreneur’s pension insurance (YEL).
– A start-up entrepreneur in Estonia doesn’t even have a free month or social tax exemption. And if you paid less than the estimated 33 percent of your income, it will be collected from you retroactively, Salo says.
For Estonians, the minimum payment for health insurance is around 200 Euros per month. Estonians whose salary is so low that it is not enough to collect the minimum payment are not entitled to health care.
Such a surprising little loss. I didn’t even think you could opt out of healthcare in a civilized European country, but apparently you can, Salo describes.
Salo currently works as a freelance and visual artist. With the exhaustion of his university studies and work still weighing on his mind, he is unable to work several tens of hours a week.
The Finnish entrepreneur says he practically supports himself with savings and spending as little as possible.
Everything goes from hand to mouth.
In the current living conditions, Salo cannot afford to pay 200 euros per month for health care.
– To be able to pay the taxes and 33 percent social tax to Estonia, I would have to earn more than double what I earn now. Means doing double work in favor of studies in practice. Here’s hoping health doesn’t fail, Salo summarizes with a smile.
In Estonia, the client pays only five euros each time he receives specialized medical care and surgery if he has paid a social tax of 33 percent of his gross salary. If the social tax is not paid, healthcare is significantly more expensive. Photo: Alexey Jalava
Salo itself is registered in Estonia, but has kept its company in Finland. He would not be able to afford to take it to Estonia.
For relocating or setting up a company to be somewhat profitable, one must earn at least the average Estonian salary per month.
Besides the fact that Salo considers the Estonian taxation model to be difficult and costly, it is also very difficult to obtain information about its legality.
The Estonian taxman himself doesn’t make matters any easier either. After two years, many things about Estonian self-employment taxation are still unclear for years, despite constant clarifications and many questions to the taxpayer.
– In these few days, I had time to exchange several letters with the tax official, and each answer only raised more questions. There is more and more information that cannot be found anywhere on the websites of the tax authorities and which contradicts all previous information, Salo says in desperation.
Salo wonders why the plight of low-income workers and entrepreneurs in Estonia is not highlighted anywhere. Now that I was living in the country the harsh reality hit me as a terrible surprise.
– Even though I read all possible Estonian websites after coming here, and I couldn’t find a mention of this small entrepreneur/freelancer position in any of them. It came as a complete surprise, and not in a positive way.
They say that sometimes you have to look far to see the near. For years the old saying has also become true.
During his time in Estonia, he has also realized how extraordinary the health care system in his former homeland, which Finns often abuse, really is.
– I had never realized how Finland’s completely free health care is in the world, if not completely unique, then at least almost like it. In principle, it is based only on the fact that you have the right to live in Finland.
But Salo is still not returning to Finland. Within the next year, Salo plans to move towards Central Europe, for example Germany or the Netherlands.
He still wants to clear one thing before moving to a new country.
In Finland, Katia Salo worked as an architect. Now he studies at Aalto University at the School of Economics. In the future, he aims to set up his own company in Central Europe. Photo: Katya Salo
I want better scrutiny of matters relating to taxation and healthcare. They can also be very wild compared to Finland, where they are ultimately very straight.
In addition to taxation and “atrocious health care conditions”, in Salo’s opinion, the housing quality is significantly lower than in Finland.
– I would not dare to buy an apartment here. During this time, I managed to live in about ten apartments, and in only one of them the water flowed into the well in the bathroom. That too was a goal controlled by the Finns, Salo smiles.
Otherwise, living in Estonia is in general good, according to Finns.
– However, Estonia is a fairly western country and, if necessary, close enough to Finland. One of the best things about Estonia is that you can order almost everything to your home here, and at very reasonable prices.
However, in his own case, Salo considers Estonia to be the wrong choice. For low-income small businessmen and freelancers, he can’t recommend moving to the country.
– For economic reasons, it is better to live in Finland, for example.
