Company cars in Estonia: motor vehicle tax, registration fee, fleets and insurance

Since 01.01.2025 an Estonian company that owns cars pays two car taxes: an annual motor vehicle tax and a one-time registration fee. A car also must stay insured while it is in the register, and fines for it go to the registered owner. This guide is for a company with one car or a fleet, owned or rented to a group company or to customers.

In short

• The registered owner on 1 January pays the full year's motor vehicle tax, in two halves by 15 June and 15 December.
• The registration fee is paid before the first registration in Estonia, or before the first change of owner of an older car. It is part of the cost of the car.
• From 01.01.2027 a temporarily deleted car is also taxed. Only a permanent deletion stops the tax.
• A registered car with no policy gets automatic insurance from the Traffic Insurance Fund, and the owner pays for it.
• A fine paid by the company is a non-business expense, taxed at 22/78. Name the driver instead.

Annual motor vehicle tax

The company that is the registered owner on 1 January owes the tax for the whole year (Motor Vehicle Tax Act § 6). The responsible user pays instead only when the owner is a leasing provider, a non-resident individual or a legal person not registered in Estonia (§ 5). The rate of a passenger car is a base of 50 euros plus a CO2 part and a mass part above 2,000 kg; the CO2 and mass parts are reduced by an age factor (§ 12, § 14). The notice comes by 15 February, and the tax is paid 50 percent by 15 June and 50 percent by 15 December (§ 7(4), § 9).

Read the full answer, with the rate tables and an example: motor vehicle tax on a company car.

Registration fee

The fee is paid before a passenger car or van is first registered in Estonia, or before the first change of owner of a car for which no fee was ever paid (Traffic Act § 190¹⁸). A passenger car pays a base of 150 euros plus a CO2 part and a mass part; those two parts are reduced by an age factor (§ 190²², § 190²⁴). In the books it is part of the cost of the car.

Read the full answer: the registration fee. Both amounts can be computed with the car tax calculator.

Late payment and fleet notices

Late tax carries interest of 0.06 percent per day from the day after the due date, at most the amount of the tax (Taxation Act § 115, § 117, § 119). The Board makes no interest claim below 10 euros, but the interest still arises and can be taken from the prepayment account.

A company in payment difficulty can apply for a payment schedule with a reasoned application (Taxation Act § 111). The Board decides within 20 days (§ 112) and may cut the interest by up to half (§ 117(2)). A missed instalment brings back the full rate on that part (§ 117(3)).

Interest paid under the Taxation Act is a non-business expense of the company, taxed at 22/78 (Income Tax Act § 34, § 51).

A routine for a fleet:

1. In January, compare the traffic register (owner and responsible user) with the fixed asset register. A leased car should show the lessee as responsible user.
2. When the notice arrives, check every vehicle and amount, and book the expense of the year.
3. Fund the prepayment account before 15 June and 15 December. Money on that account settles liabilities in the order they arose (Taxation Act § 105).
4. Recharge the tax under a written agreement to the group company or customer that uses the car. The recharge is part of the rent and carries VAT (VAT Act § 12).

A notice can be challenged by an objection within 30 days of delivery (Taxation Act § 138), for example when the vehicle data are wrong. An objection does not help when the register still showed the car in the company's name on 1 January.

Temporary deregistration

A temporary deletion from the register ends the traffic insurance duty and the insurance contract (Motor Insurance Act § 5, § 21). For the motor vehicle tax it helped only in 2025 and 2026: a car temporarily deleted on 1 January of those years was not taxed while the deletion lasted. From 01.01.2027, temporarily deleted and suspended vehicles are taxed (Motor Vehicle Tax Act § 3, § 25(5)).

To stop the tax, the car must be deleted for good: scrapped on a scrapping certificate, deleted on a sale abroad, or on its registration in another EU state (Traffic Act § 77(6)). A company car that is simply parked or used abroad stays in the register. Only the permanent deletion, or a deletion because the police declared the car wanted, shortens the taxation period (Motor Vehicle Tax Act § 7¹).

A car that was destroyed and cannot be scrapped properly, or that was sold under a contract the buyer never kept and never re-registered, can be deleted as a lost vehicle (Traffic Act § 77(6¹)). Until 31.12.2026 a temporarily deleted or suspended car whose last inspection expired at least two years ago can be deleted this way for a state fee of 15 euros (Traffic Act § 264(16¹); State Fees Act § 142⁷⁴(6)). The Transport Administration states that the fee will be 800 euros from 01.01.2027 (Transport Administration: deleting vehicles from the traffic register). A car that still exists and is only parked off the road cannot be deleted as lost.

A car may be temporarily deleted for 1 to 24 months, and it must not be used in traffic meanwhile (Traffic Act § 77(7), (8⁴)). When the deletion ends, automatic insurance with the Traffic Insurance Fund starts unless a policy is taken out (Motor Insurance Act § 60).

Selling or scrapping a car

Sale. The traffic insurance contract passes to the buyer by law when the buyer is entered in the register (Motor Insurance Act § 21(4); Law of Obligations Act § 524). After that, the seller cannot end it. The seller cannot end it before the sale either, because the registered owner must stay insured until the buyer is entered (Motor Insurance Act § 7(1), § 21(2)). A voluntary comprehensive policy (kasko) also passes to the buyer; tell the insurer of the sale at once (Law of Obligations Act § 494-496).

The buyer must file the change of owner within five working days; otherwise, after the seller's notice, the Transport Administration temporarily deletes the car (Traffic Act § 77(3), (8)). Until the buyer is entered, the company stays the registered owner. It owes the motor vehicle tax of any year whose 1 January falls before the entry, and fines keep coming to it. A sale during the year gives no tax refund (Motor Vehicle Tax Act § 10(2)). See the Traffic Insurance Fund page on a change of vehicle owner.

Scrapping and total loss. A car is deleted on a scrapping certificate (Traffic Act § 77(6)). The insurance contract then ends (Motor Insurance Act § 21(1)). The motor vehicle tax is cut from the day after the deletion, and the excess is refunded to the prepayment account (Motor Vehicle Tax Act § 7¹, § 10(1)). Make sure a wreck leaves the company's name in the register before 1 January.

Cars with no traffic insurance

The owner, or the responsible user, must insure a car registered in Estonia (Motor Insurance Act § 4, § 7). There are two exceptions: no duty while the car is temporarily deleted or suspended, and none for 12 months after the last contract ends if the car is not used at all (§ 5, § 6).

A registered car with no policy gets automatic insurance from the Traffic Insurance Fund (§ 60). The owner pays the Fund a compulsory premium for each period of cover (§ 62): the first notice covers 30 days, later notices 90 days (§ 65). If such a car causes an accident, the owner also pays a deductible of 640 euros (§ 61, § 64). The notices are enforceable (§ 68), and the duty to pay applies whether or not a reminder letter was read (§ 6(5), § 64¹(2)).

The fix: buy a policy for a car in use, or temporarily deregister a car that is off the road. The Traffic Insurance Fund explains the duty on its page compulsory traffic insurance.

Parking fees and camera fines

Municipal parking. When the parking fee is unpaid or the paid time is exceeded, the late fee (viivistasu) is owed by the registered owner, or by the responsible user if one is in the register (Traffic Act § 188). There is no procedure to name the driver. The fee is at most 31 euros a day, and an unpaid decision goes to a bailiff (§ 188, § 189).

Camera fines. A fine for a violation recorded by a camera goes to the registered owner or responsible user, up to 420 euros (Code of Misdemeanour Procedure § 54¹). A company that contests the notice must name the driver, with the name, address, driving licence number and personal code or date of birth. The notice is then sent to that person (§ 54⁵(5), § 54⁶(4)). An owner who lets someone else use a car must keep these driver data for six months (Traffic Act § 72(2)). The Police and Border Guard Board explains how to contest a fine notice.

How a fleet owner shifts the burden:

1. Enter a long-term user (a lessee, a long rental, a sister company) as responsible user in the traffic register. Parking fees, camera fines and the insurance duty then go to that user.
2. Write the rental terms so that the customer bears fines, parking fees and towing costs, and keep booking data that identify the driver at any time.
3. Route every notice to one mailbox, name the driver within 30 days for camera fines, and pay parking fees quickly to avoid bailiff costs.

How fines are taxed

A fine imposed under law and paid by the company may not be deducted (Income Tax Act § 34). For a resident company it is a non-business expense, taxed at 22/78 and declared on the TSD by the 10th of the following month (§ 51(2), § 54). A later repayment by the driver does not undo the tax.

The cleaner route is to name the driver, so the fine is reissued to that person. If the company then pays a fine reissued to an employee or a board member, it pays that person's own debt: a fringe benefit, with income tax and social tax, unless the person repays it (Income Tax Act § 48(4)).

Whether a municipal parking late fee counts as a fine for this rule is not settled. A careful company recovers it from the user.

Insurance payouts and repairs

• Indemnity. An insurance indemnity for a loss is not payment for a supply. It carries no VAT and needs no sales invoice (VAT Act § 4). Book it as other income when the claim arises (Accounting Standards Board guideline RTJ 5). Where the insurer takes over the wreck, the part of the payment for the wreck can be taxable consideration for a supply of goods (§ 2(5)). Check the claim decision.
• Repairs. The garage invoices the company, in the company's name, and input VAT is deducted only on such an invoice (VAT Act § 31, § 37). On a passenger car only 50 percent of the input VAT on repairs and running costs is deductible, unless an exception applies, for example a car held by a dealer for resale or by a rental business for renting out (§ 30).
• Total loss. Write off the carrying amount when the car is destroyed or declared a total loss (Accounting Standards Board guideline RTJ 5), and book the indemnity separately as other income.

For the private use of company cars, see cars and private use.

General information, not advice for your situation. The law as in force on 30.09.2026.