Hourly rate profit calculator

This calculator shows how much is earned from one worker: the firm sells a service to a client at an hourly rate, pays the worker an hourly wage, and the difference is the firm profit. Finally you see how much the owner keeps if the profit is taken out as a dividend.

How is it calculated?

• Gross or net? For an employee you can enter the hourly pay as gross (the amount agreed in the contract) or as net (what the worker takes home). For net, the gross pay is worked back: 2nd pillar 2%, unemployment insurance 1.6%, income tax 22%, basic exemption €700 per month.
• Labour cost to the firm = for an employee, the gross pay × 1.338 (gross + social tax 33% + employer unemployment insurance 0.8%); for a subcontractor (invoice), simply the invoice amount.
• Firm profit = revenue − labour cost. In Estonia retained profit is tax-free.
• As a dividend (net) = profit × 0.78 (the company pays income tax 22/78); the owner pays no additional tax.

Note. VAT is not included (it passes through – the client pays it and the firm remits it). An actively working owner is expected by the tax authority to also pay a reasonable salary. For a dividend vs salary comparison see the salary vs dividend calculator.