Estonia expecting EUR 230 ml in revenue from car tax in 1st year

The government expects revenue inflow from the tax to total 230 million euros in the first full year of the implementation of the tax in 2025. Photo: Taavi Sepp

Presenting the planned motor vehicle tax on Monday, Estonia's Minister of Finance Mart Vorklaev said that the government expects revenue inflow from the tax to total 230 million euros in the first full year of the implementation of the tax in 2025.

According to the minister, the main purpose of the tax is to reduce the environmental impact of transport and motorization, as well as the disposal of junk vehicles. The goal is to slow down motorization by 1 to 3 percent compared to the present.

The design of the tax is based on the principle that it should be simple, with a broad base and few exceptions to avoid manipulation. The tax will not apply to emergency vehicles used by the rescue service, the ambulance service, the police and the border guard, prisons, the Ministry of the Interior and the Tax and Customs Board, as well as to motor vehicles adapted for disabled people. By 2025, when the car tax will come into force, the Ministry of Social Affairs will also devise additional needs-based support measures to mitigate the impact of the tax on people with special needs.

The tax would consist of two parts: a one-off registration fee to be paid when the vehicle is first registered in Estonia, and an annual tax. The registration fee will apply to passenger cars and vans, while the annual tax will also apply to motorcycles and all-terrain vehicles. Tractors and agricultural machinery will not be taxed.