Passenger car and van owners will start paying a tax based on the principle that the heavier and more polluting the car, the more registration fee and annual tax must be paid.

While a 20-year-old Chrysler Pacifica will cost between €2,000 and €3,000, the registration fee would be over €600. But the fee for a new hybrid or electric vehicle will not cost more than €150.

"If it's a hybrid vehicle where the mass components are small and the share of CO emissions is also low, then owning such a vehicle will definitely be more affordable. /.../ Be sure to use the calculator. It will provide an indication of what the tax obligation might look like next year," explained Avely Raid-Lelov, service manager of the income tax department of the Tax and Customs Board.

Car owners will receive the annual tax notice before February 15, and it can be paid in two parts. The registration fee must be paid when the vehicle is first registered in Estonia and also upon the first change of ownership.

"Of course, if your CO₂ and specific emissions are low, around 100 to 120 grams per kilometer, and the curb weight is under two tons, then your registration fee will also be lower. However, if your vehicle's gross weight is 2.5, three, or 3.5 tons in the passenger car category, with specific emissions over 200 or 250 grams per kilometer, then we're already talking about a very high registration fee and annual tax," explained Joel Jesse, director of the Transport Administration's traffic service.

The difference in the registration fee can be 10 times and reach up to a five-digit amount.

"There are some examples that are so unreasonably expensive – I will not name specific makes and models here – but their price essentially doubles. We are talking about affordable cars that are no longer practical to buy, and these will likely disappear from the Estonian market altogether," said Silver Haavamaa, manager of car dealership Mobile Autokeskus

This is why a lot of big cars are being purchased now.

"The increase started in August and has continued up to the present, with a sharp upward trend and incredible momentum. I wouldn't call it mass hysteria, but it's definitely a case of leaving things to the last minute," said Haavamaa.

The Bank of Estonia leasing statistics also confirm the trend.

"In September, it was the highest this year, with around 1,700 contracts. The increase has occurred in both the used and new car markets. However, looking further back, it's clear that the new car market still has not returned to pre-COVID levels," said Bank of Estonia Economist Gaili Grüning.

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