Motor Vehicle Tax 2025: Key Details for Car Owners

Starting January 1 of next year, the Motor Vehicle Tax Act will come into force, impacting motor vehicle owners and responsible users. According to the law, the motor vehicle tax will comprise two components – a yearly tax and a registration fee.

According to the explanatory memorandum, the purpose of the tax is to encourage buyers of new vehicles to make more environmentally sustainable choices and to ensure that older vehicles are used to their full lifespan. Additionally, the tax is intended to ensure that vehicles left unused for extended periods and are causing environmental pollution are properly disposed of in compliance with regulations.

 

Annual Motor Vehicle Tax

 

The annual tax is a fee imposed on vehicles registered in the Estonian Traffic Register, which the vehicle owner is required to pay to the Estonian Tax and Customs Board. If the owner is a lessor, a non-resident individual, or a legal person not registered in Estonia, the tax obligation falls upon the responsible user of the vehicle. In accordance with the Motor Vehicle Tax Act, the annual tax must be paid in two instalments: half by June 15 and the other half by December 15.

The tax calculation is based on vehicle data available in the Traffic Register. For vehicles powered by internal combustion engines and hybrids, the annual tax rate consists of a base, a CO₂ emissions and a gross vehicle mass component. The base component is 50 euros. The CO₂ emissions component is calculated from emissions data obtained using either the WLTP or NEDC method, with the g/km amount of CO₂ output multiplied by the applicable range multiplier. For vehicles without a CO₂ output in the traffic register, a reference value for tax assessment is set based on other data available in the traffic register. This is calculated with the following formula: 0,29 × engine power (kW) + 0,07 × curb weight (kg) + 4,92 × vehicle age (years) + fuel-specific parameter value (if necessary). For a car with a gross weight exceeding 2000 kg or a plug-in hybrid with a gross weight over 2200 kg, an additional 0,4 euros per excess kilogram is added, up to a maximum of 400 euros.

For trucks with a gross weight up to 3500 kg, the tax rate includes a base component of 50 euros and a CO₂ emissions component, calculated using WLTP or NEDC data multiplied by the CO₂ emission coefficient.

The calculated total tax rate, less the base component, is further adjusted by an age-related coefficient for the vehicle, ranging between 0,92 to 0. An age coefficient does not apply to vehicles less than five years old. For example, a vehicle with at least five years of registration by the beginning of the tax period would be multiplied by a factor of 0,92. This age-based multiplier ensures a lower tax for older and less valuable vehicles. The explanatory memorandum to the vehicle tax states that, according to this calculation, the median annual tax for a vehicle aged 10 years would amount to 167 euros, equating to approximately 14 euros per month.

 

Example calculation based on Motor Vehicle Tax Act § 13 and § 14:

A 2020 Audi A6

Gross weight 2425 kg

CO₂ indicator of 162 g/km according to the WLTP method.

Base component	50 euros
CO2 emission component 118-150g= 3 euros 151-200g= 3,5 euros	(33 × 3) + (12 × 3,5)= 141 euros
Gross mass for each kg over 2000 kg, multiplied by 0,4 euros	425 × 0,4= 170 euros
Age multiplier In 2025, the vehicle will be 5 years old, allowing a 0,92 multiplier on the CO2 and mass components.	(141 + 170) × 0,92= 286,12 euros
Total	50 + 286,12= 336,12 euros

 

The annual tax for fully electric vehicles consists of a base component of 50 euros and an additional weight-based component. For electric vehicles with a gross weight exceeding 2400 kilograms, an additional charge of 0,4 euros per excess kilogram is applied, up to a maximum fee of 400 euros. For fully electric trucks, the annual tax consists solely of a base component of 30 euros.

For motorcycles, wheeled tractors, and off-road vehicles (ATVs and UTVs), the annual tax calculation considers the vehicle’s age and engine capacity. Accordingly, the annual tax for these vehicles ranges from 0 to 90 euros.

 

Vehicle Registration Fee

 

Unlike the annual tax, the registration fee applies only to cars and trucks with a gross weight of up to 3500 kilograms. The registration fee must be paid to the Transport Administration and generally represents less than ten percent of the vehicle's estimated value.

Registration fees vary between vehicles being registered for the first time (starting January 1, 2025) and those already existing in the Estonian Traffic Register. For initial registration of cars and trucks, a registration fee must be paid. For cars and trucks already registered in the Estonian Traffic Register, the registration fee is payable upon the first change of ownership.

An obligation to pay the registration fee does not arise if a lessee, who was previously the responsible user of the vehicle, becomes its owner at the end of the lease agreement. Similarly, if ownership is acquired through inheritance, the fee is waived, with the new owner being responsible for payment only upon the next change of ownership.

The structure of the registration fee is comparable to the annual tax, consisting of a base component, a CO₂ emissions component, and a weight component. For cars, the base component is 150 euro, while for trucks, it is 300 euros. The calculation for the CO₂ emissions component follows the same methodology as the annual tax but with higher multiplier values, reflecting an intent to encourage the acquisition of low-emission vehicles.

The calculation for the weight component also similar to the annual tax, with an additional charge of 2 euros for each kilogram over 2000 kg up to a maximum of 2000 euros. The total amount, excluding the base component, is then adjusted by an age coefficient, ranging from 0,87 to 0,05. Unlike the annual tax, the age coefficient applies to vehicles at least one year old.

 

Example calculation based on Traffic Act § 190²² and § 190²⁴, effective January 1, 2025:

2020 Audi A6

Gross weight of 2425 kg

CO2 value of 162 g/km according to the WLTP method.

Base component	150 euros
CO2 emission component 1-117g= 5 euros 118-150g= 10 euros 151-200g= 30 euros	(117 × 5) + (33 × 10) + (12 × 30)= 1275 euros
Gross mass for each kg over 2000 kg, multiplied by 2 euros	425 × 2= 850 euros
Age multiplier In 2025, the vehicle will be 5 years old, allowing a 0,48 multiplier on the CO2 and mass components	(1275 + 850) × 0,48= 1020 euros
Total	150 + 1020= 1170 euros

 

The registration fee for fully electric cars consists of a base fee of 150 euros and a weight-based fee. If the vehicle exceeds a total weight of 2400 kilograms, an additional 2 euros per kilogram is charged, up to a maximum of 2200 euros. The registration fee for an electric truck is 200 euros. Lastly, it should be noted that the registration fee will increase in 2028 and again in 2031.

Although the annual tax is administered by the Estonian Tax and Customs Board and the registration fee by the Transport Administration, both fees go to the state budget. The revenue is used to fund public services according to the State Budget Act.

 

The article was published in the October 2024 issue of the magazine RUP. The author is Laura Liset Keerov, a lawyer at Advokaadibüroo Lepmets & Nõges.