Estonia is set to introduce a new car tax starting January 1, 2025. This tax will affect companies and individuals and consists of two main components: a one-time registration fee and an annual tax. The aim is to reduce vehicles’ environmental impact and encourage the adoption of less polluting options.
Registration Fee
The registration fee applies to the first registration of a new or used vehicle in Estonia and the first change of ownership after the tax’s implementation. This fee includes a base fee of €150, a CO₂ emissions component, and a gross weight component for passenger cars. Notably, all-electric vehicles are exempt from the CO₂ component. For vans, the fee consists of the base part and the CO₂ component. If CO₂ data is unavailable in the vehicle register, the WLTP method’s reference value will be used for calculation. The fee decreases with the vehicle’s age, reaching zero for cars over 20 years.
| Component | Fee |
|---|---|
| Base Fee | 150€ |
| CO₂ Component | 1–117 g/km = 5 €/g 118–150 g/km = 10 €/g 151–200 g/km = 30 €/g 201+ g/km = 50 €/g |
| Mass Component | 2000+ kg = 2 €/kg for each kg over 2000 kg, up to a maximum of 2000€ |
| Mass Component for Electric Cars | 2400+ kg = 2 €/kg for each kg over 2400 kg, up to a maximum of 2200€ |
Annual Tax
The annual tax is calculated based on CO₂ emissions, engine power, gross vehicle weight, and the vehicle’s age. Like the registration fee, the tax amount decreases as the vehicle ages, with cars over 20 years old only subject to the base fee. The tax is charged to the registered owner or responsible user as of January 1 each year, with payments due by June 15 and December 15. The Tax and Customs Board will send tax notices by February 15, allowing owners ample time to plan and pay.
| Component | Fee |
|---|---|
| Base Fee | 50€ |
| CO₂ Component | 118–150 g/km = 3 €/g 151–200 g/km = 3.5 €/g 201+ g/km = 4 €/g |
| Mass Component | 2000+ kg = 0.4 €/kg for each kg over 2000 kg, up to a maximum of 400€ |
| Mass Component for Electric Cars | 2400+ kg = 0.4 €/kg for each kg over 2400 kg, up to a maximum of 440€ |
Impact on Leasing Contracts
The car tax applies to the registered owner, which means that in most leasing contracts, the tax responsibility lies with the lessee (the person or company leasing the vehicle). This could impact private and corporate leasing arrangements, as lessees must account for the added tax cost in their leasing budgets. We recommend that you review your leasing contracts carefully.
Future Adjustments
The Ministry of Finance has announced planned increases in 2028 and 2031, which will affect passenger car and van registration fees. These adjustments will raise the share of CO₂ emissions in the registration fee and increase the base and mass fraction rates.
Considerations for Car Owners
The new car tax may make you reconsider owning or buying a car after 1 January 2025. Estonian companies with large vehicle fleets should assess the impact of taxes on their cost structure and adjust their services’ pricing. Investing in electric or hybrid vehicles may be advantageous, as the tax favours low CO₂ emissions.
For detailed information and to calculate specific tax amounts, refer to the Transport Authority’s website and use the official calculator to avoid unexpected costs.
Stay Informed with Unicount
At Unicount, we’re committed to updating our clients on legislative changes affecting e-residents and Estonian business owners. We’ll continue to monitor these proposed tax reforms and provide guidance on adapting to the new tax structure. If you have any questions about these upcoming changes or need help navigating Estonia’s regulatory environment, please get in touch with us.
To stay informed about these tax updates, ensure you’re signed up for our newsletter or check our blog for the latest insights.
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