--- title: Car tax 2025 - what do companies and individuals need to know? date: 2024-09-04T07:10:35Z modified: 2026-04-10T07:47:14Z permalink: "https://grow.ee/automaks-2025/" type: post status: publish excerpt: A new car tax will come into effect in Estonia from January 1, 2025. This will bring significant changes for both companies and individuals. wpid: 14290 featured_image: "https://grow.ee/wp-content/uploads/2024/09/Automaks-2025-Grow-FInance-scaled.jpeg" featured_image_alt: Automaks 2025 - Grow FInance timestamp: 2026-04-10T07:47:14Z tags: - Taxes --- ![Automaks 2025 - Grow FInance](https://grow.ee/wp-content/uploads/2024/09/Automaks-2025-Grow-FInance-scaled.jpeg) _Image: Midjourney AI_ As of **January 1, 2025**, a new car tax came into effect in Estonia, which brought significant changes for both companies and individuals. The aim of the tax is to reduce the environmental impact of cars, motivate people and companies to choose less polluting vehicles, and meet the state budget. In this article, we will provide an overview of the main aspects of car tax and what to keep in mind when imposing it. ## **The nature and structure of car tax** Car tax consists of two main parts: a one-time registration fee and an annual annual tax. It applies to all vehicles registered in Estonia, with some exceptions, such as emergency vehicles. The amount of the tax depends on several factors, including the age of the vehicle, CO₂ emissions (or in some cases engine power) and gross vehicle weight. The tax is calculated in the name of the owner or responsible user registered as of January 1 of each year. Payment is due twice a year: by June 15 and December 15. The Tax and Customs Board sends tax notices for the current year no later than February 15, which gives owners enough time to plan and pay the tax. ## **Registration fee as part of car tax** The registration fee is a one-time fee that must be paid upon initial registration of a new or used vehicle in Estonia, as well as upon the first change of ownership after the car tax comes into force in January 2025. It is important to note that if the vehicle is purchased from a leasing company or inherited, the registration fee does not have to be paid - the fee must be paid only upon the next sale transaction. For passenger cars, the registration fee consists of a base part, a CO₂ component, and a gross vehicle weight component. For fully electric vehicles, there is no CO₂ component. The registration fee for vans includes only the base part and the CO₂ component. If there is no CO₂ data in the vehicle register, the WLTP reference value is used for the calculation. The motor vehicle tax rate is multiplied by a multiplier depending on the age of the motor vehicle, which decreases as the age increases and reaches zero for a 20-year-old vehicle. ## **Annual tax and its calculation** The calculation of the annual tax takes into account CO₂ emissions, engine power, gross vehicle weight and age coefficient. The age coefficient is also an important element in the annual tax, which reduces the car tax for all vehicles based on engine power and gross vehicle weight. For cars over 20 years old, it reaches 0 euros, which means that only the basic fee will have to be paid in the future. Looking ahead, the Ministry of Finance has announced planned price increases in 2028 and 2031. These increases affect registration fees for both passenger cars and vans. In addition, the share of CO₂ emissions in the registration fee will increase, and the base and mass portion rates will also increase. ## **Tax benefits and exemptions** Emergency vehicles, diplomatic vehicles and vehicles related to certain defense activities are exempt from the annual tax and registration fee. The car tax liability is reduced by up to 100 euros for each child for the parent with custody of the child or the natural person guardian. If the child has multiple parents, the amount reducing the tax liability is divided equally between the parents. If the vehicle is sold abroad and deleted from the Estonian traffic register, the taxation period is shortened until the date of the deletion entry. In the event of theft of the vehicle, it is temporarily deleted from the register. No annual tax is imposed on vehicles temporarily deleted from the register. The lessee does not have to pay a registration fee when buying the vehicle from the leasing company and transferring it to his/her name, or when registering a vehicle received as an inheritance in his/her name. ## **What do companies and individuals need to consider?** The introduction of a new car tax requires thorough financial planning from both companies and individuals. Companies that use a large fleet of cars in their activities must assess the impact of the car tax on their cost structure. When planning to purchase a vehicle, individuals should consider how the new tax will affect their monthly expenses. When choosing a vehicle, it is worth considering investments in electric or hybrid vehicles, as the new tax system favors more environmentally friendly choices. Before making a purchase decision, it is wise to analyze the tax rates of different vehicles to find the most suitable and cost-effective solution for you. Accounting and tax advice become especially important in the context of car tax. Companies should make sure that their accountants are familiar with the car tax law and are ready to implement the relevant changes. Individuals may find it useful to consult a tax advisor to find the optimal solution for their situation. ## **Summary** Car tax will bring significant changes to Estonian car owners from 2025. Both companies and individuals must take the new tax into account in their financial and vehicle plans. Timely preparation and thorough analysis will help avoid unexpected costs and make the best choices in the new tax environment. It is important to remember that the exact car tax rates are set by law and special calculators have been created to calculate them. We recommend using official sources to calculate the exact tax amount to avoid unpleasant surprises. _The exact car tax rates are set by law. Use the **[calculator](https://avalik.emta.ee/mototorsoidukimaks/calc)** to calculate the exact tax amount._ Reference to the [**Motor Vehicle Tax Act**](https://www.riigiteataja.ee/akt/117082024001). The Estonian Transport Board's **[vehicle data query](https://eteenindus.mnt.ee/public/soidukTaustakontroll.jsf)**. --- Do you want to know more about the impact of car tax on your company or personal finances? 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