--- title: Planned tax changes in Estonia in 2023-2025 date: 2023-05-26T06:34:26Z modified: 2024-05-21T09:09:32Z permalink: "https://grow.ee/planeeritavad-maksumuudatused-eestis-aastatel-2023-2025/" type: post status: publish excerpt: Overview of planned tax changes in Estonia in 2023-2025. wpid: 8023 featured_image: "https://grow.ee/wp-content/uploads/2023/05/shutterstock_1968119629.jpg" featured_image_alt: Estonia timestamp: 2024-05-21T09:09:32Z tags: - Taxes --- ![Estonia](https://grow.ee/wp-content/uploads/2023/05/shutterstock_1968119629.jpg) Before the Riigikogu elections, promises were generously distributed to gain votes, and now politicians are looking for coverage for their promises. Therefore, the Estonian tax system is changing, and the tax changes planned by the government may significantly affect both companies and individuals. We provide an overview of the tax changes planned in Estonia in 2023-2025. The details are certainly not set in stone yet, but it gives a clear direction in which direction we are moving. ## **The planned tax changes are as follows:** - From 2025, the current tax rate on personal income tax will be abolished and the income tax exemption will be increased to 700 euros per month. - VAT will be increased by 2% to 22% in 2024. The plan is to abolish the lower VAT exemption for accommodation service providers from 1 January 2025, but an intermediate tax rate (13%) is also under discussion. - Personal and corporate income tax will be increased by 2% in 2025, and the plan is to abolish the preferential rate of 14% applied to dividends. - Car tax will be introduced from 1 July 2024. Details are still unclear. - The use of packaging and plastic will be taxed with the aim of reducing the generation of packaging waste. - Local governments will be given the opportunity to establish local taxes. - The excise duty on alcohol and tobacco will be increased by 5% over the next 3 years and the state tax revenue from gambling will be increased. - Additional tax-free income for children, spouses and housing loan interest will be abolished from 2024. Tax changes may affect companies differently depending on their size, field of activity and structure. One of the most important principles of designing the Estonian tax system is its simplicity and clarity, and the elimination of the "tax hump" will certainly fulfill this goal. At the same time, there is a risk that low-wage earners will suffer more, especially as a result of the VAT increase. Accommodation companies, which see a strong setback to their competitiveness compared to destinations in other countries due to the planned VAT change, are actively lobbying to slow down the tax increase. Estonia will certainly lose some of its attractiveness among foreign companies if corporate income tax increases and the lower tax rate no longer applies to regularly paid dividends. Entrepreneurs are also affected by the choices and decisions of local governments, when they use the opportunity to impose local taxes to increase their revenues and reach into the entrepreneur's pocket. The planned car tax will increase the costs of both entrepreneurs and private individuals. The more vigilant among us, who consider the wider spread of green thinking inevitable, will certainly welcome tax changes that push for environmental protection. Ultimately, it is a matter of mindset whether to view tax increases as an undeserved punishment or an opportunity to contribute to the common well-being and security of the people of Estonia. Tax laws can be complex and [consulting a tax advisor](https://grow.ee/services/maksunoustamine/) is recommended to obtain more accurate and relevant information about your specific situation. It is always wise to consult your [accountant](https://grow.ee/services/raamatupidamine/) or tax advisor in advance before planning future-oriented transactions. 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