While Estonia initially planned to charge a registration fee for new cars and imported second-hand cars, to ensure equal treatment in the European common market, the new version of the car tax will see the tax charged also when a used vehicle already registered in Estonia changes hands for the first time. Whether the fee will have to be paid by the buyer or the seller will be up to the sides to decide, "Aktuaalne kaamera" news reported Thursday.

"It is a matter of agreement as the fee will be due upon sale of the vehicle. Whether the sides will split the cost, calculate it into the price is up to them. I'm not up to speed with all the details, while it would make sense. I haven't read the letter of the law, while it could work as various state fees that have to do with vehicles currently do, where the buyer and seller have to agree," Prime Minister Kaja Kallas (Reform) said.

Madis Laas, head of the income tax department of the Tax and Customs Board, said that the way the car tax is structured will make it difficult to avoid paying it as the tax sum does not depend on the price of the vehicle.

"The idea is that the tax sum is calculated based on information in the Transport Administration's register. For example, based on the vehicle's mass or CO2 emissions, which makes it difficult to manipulate the data used to calculate the sum," he said.

While it has been suggested that the base component of the registration tax, with vehicle mass and emissions making up other components, will be €300, this will likely fall as the changes will result in a wider tax base.

Lauri Läänemets, Estonia's interior minister and leader of the coalition Social Democratic Party (SD), said that he is not a fan of the changes as they impact less fortunate people.

"The European Commission has made it clear that the tax cannot be laid down any other way, so it is happening, unfortunately. Our message has always been that it needs to come with a public transport reform, which is currently being prepared by the government, so that those who cannot afford a car could still get to where they need to go," Läänemets noted.

The new tax will add to the Tax and Customs Board's workload, Madis Laas said, explaining that the agency will need to hire new people, develop relevant IT systems and monitor attempts to avoid paying the tax.

Estonia's incoming car tax will also include an annual fee likely based on the vehicle's age, mass and CO2 emissions.

The Ministry of Finance is set to unveil the new plan in more detail in May.

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