The latest episode of ETV investigative show "Pealtnägija" looked at the trade in "phantom vehicles."
The practice has emerged in the wake of the announcement of a planned nationwide car tax, amid fears of being liable for the tax even on vehicles which are not roadworthy or are unused or superfluous to requirements, for any reason.
The car tax was announced when the current coalition entered office in April this year, but would need to pass through the Riigikogu before it could be enshrined in law. It would apply to cars and vans, not motorbikes. Trucks are subject to their own separate tax.
The "phantom vehicle" owner transfers ownership of the car to the purchaser for a nominal fee, but does not actually sell the vehicle itself or transfer it in any other way.
Thus the "phantom vehicle" buyer is the registered owner of the car or van in name only.
The action also circumvents the state fees on vehicle transactions, one proponent says.
"Phantom vehicle" dealer, Tanel A., told "Pealtnägija" that in the six months since he started, he has acquired over 1,200 vehicles registered in his name.
Tanel A. argues that this is wholly legal, and says he is not concerned about this mass ownership catching up with him, for instance in being liable for car tax on all 1,200 vehicles, in a "Pealtnägija" interview which follows.
When and how did you start purchasing 'phantom vehicles'?
For me, the practice of buying phantom cars started around April 2023. I had been for a while following this "service" as offered publicly via Facebook groups, later becoming interested in it myself. Initially, I tested out and researched how the system could function in a way that could avoid state fees, and once that was all clear, purchasing phantom vehicles got underway.
That there is a demand for this and customers out there gave it an impetus. People are happy with this, it helps rid themselves of their concerns, while I get a few more euros in my pocket as a result.
According to the data we have to hand, you are the record-holder for Estonia, as you have already amassed 1,200 phantom vehicles. Can you give us a little overview of the kind of vehicles referred to here?
The majority of them are, so to speak, the people's cars, which had graced the homes of many different people and have now ended their life-cycle. This includes for example, VW, Audi, Opels, various Fords.
Naturally there are a lot of BMWs too, for example. There were a lot of these around at the time [I started], and many were being sold or exchanged, either as a whole, of for spares.
Many of the customers noted a lack of emphasis on the fact that a car remained in their name after getting rid of it, or did not notice that fact at all. At that time, since there were no taxes, mandatory insurance etc. due, this was not an issue; removing the name became important only when compulsory insurance, and, as now, a car tax, was put in place.
What do you think about the fact that there is such a large number of phantom vehicles listed in the Estonian registry?
In my opinion, this situation has been caused by both the public themselves and, to a lesser extent, by the state. It is the fault of the public that they didn't follow through on things when, for example, the car was sold at the time. The state on the other hand should have thought long ago about how to resolve this situation.
When we could see that no action has been taken with a car for 10+ years, it would be possible to delete it from the register, with the permission of the car owner, or with proof that the car does not actually exist.
At the moment, of course, I am satisfied with how things have turned out. I have been able to help a lot of people with this worry, while making a little extra money for myself.
Bearing in mind you charge €15 per vehicle and have registered 1,200 vehicles in your name, you have earned, as it were, €18,000. Is this your main service and how does the Tax and Customs board view this business?
I have a day job, and the phantom cars aspect is a side gig. The calculation is not quite correct, as from the start I have significantly cut the fee in cases of two or more vehicles' registration.
I can confidently state that after all the time involved, the amount will not reach as high as the calculation process would predict.
Has anyone from officialdom expressed interest in why you are buying these vehicles in bulk, and what you plan to do with them?
So far, no one has been interested in that.
Who uses your services?
Completely ordinary Estonian people, generally ordinary wage workers. Many immediately share my contact with an acquaintance, family member, friend, neighbor, or co-worker.
How much has demand for your service risen in the wake of the car tax news?
When we started, demand was high. Meanwhile, when articles got published saying that "phantom vehicles" might not be taxed, demand fell. However, as soon as it was made public that every vehicle entered on the register will get taxed, interest in the service immediately rose again.
Both you and other people have found out that you can do business with these phantom vehicles, via the back door, without incurring the state fee – by the seller transferring the vehicle and the buyer accepting it, but not completing the transaction. The car thus remains in transfer limbo. Are you sure that the 1,200 or so vehicles in your name can hang in this limbo for an indefinite time-frame?
Everything is in line with the law. The Transport Board says that if people conclude the handover of a vehicle within the e-service, this is a matter between those private parties, so they have no cause to interfere.
Your own show (ie. "Pealtnägija") said this too.
I see no reason to worry that anyone would somehow be able to flip things over so the vehicles end up back with their old owners. This would be somewhat infeasible. If the option to change the owner of a car in this way has emerged in the Transport Board's e-services, this makes it all legal, so it would be absurd to start canceling that, all of a sudden.
I don't want to get rich at other people's expense, and I am in no way a hater of the state, but if a system is set up in a way that it can no longer function, I would think that this would be somewhat illogical and unfair.
What are you going to do with the over one thousand entries of vehicles listed in your name? Do you not fear that one day you'll be due car tax on every single one of them, or have to pay some other fee to divest yourself of them?
Right now, I'm collecting them, letting things tick over calmly, but I'm happy to help people get rid of these troublesome vehicles. I'm not afraid of taxes or other fees.
Editor: Andrew Whyte, Barbara Oja