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The fiscal impact of the motor vehicle tax in Estonia is estimated to be around 120 million euros in the first full year of implementation of the tax.
Motor vehicle tax to bring EUR 120 mln into Estonia's state coffers annually
The amount is split roughly equally between the registration tax and the annual tax, and would be of the same order of magnitude in the case of both models of the tax put forward by the Ministry of Finance.
The ministry on Wednesday made public a document of legislative intent for the introduction of a motor vehicle tax that sets forth two alternative models for the tax. The first of them, called Model A, is based on the global and local environmental impact of a motor vehicle more broadly over its life cycle, including manufacture, use, and disposal. The alternative, Model B, focuses on carbon dioxide (CO2) emissions from the vehicle during its use.
The tax is vehicle-based, meaning that if a person/company has several vehicles, the tax must be paid for all of them. The owner or lessee of the vehicle will pay the tax.
All M1 and M1G passenger cars and N1 and N1G vans weighing up to 3,500 kilograms and vehicles of categories L3e to L7e -- motorcycles, moped cars, etc. -- will be subject to the tax.
The due date for the annual tax would be Feb. 15 of the taxation year. The taxpayer is the person who, according to the Traffic Register, is the owner of the vehicle as at Jan. 1 of the taxation year. Upon change of ownership of the vehicle, the tax is not refunded or transferred, but its proportional amount can be taken into account in the purchase and sale transaction of the vehicle at the request and by agreement of the parties. The registration tax is paid before the vehicle is entered in the Traffic Register.
According to the plan, the motor vehicle tax will take effect from July 1, 2024, and the annual tax would have to be paid for the first time in August 2024, for six months.