Cars passed from company to private ownership as new tax enters into effect

Vehicles parked in a parking lot. Photo is illustrative.
Vehicles parked in a parking lot. Photo is illustrative. Source: (Martin Dremljuga/ERR)

Last December, more than 4,000 cars were re-registered from business to private ownership with the Estonian Road Administration — nearly four times as many as usual.

The likely motivator behind the large uptick in cars passing from company to private ownership is the fact that beginning Jan. 1, the state will begin taxing cars used for both private and company use, reported ETV news broadcast "Aktuaalne kaamera."

Company cars will be taxed based on engine power, and thus mixed-use vehicles will be taxed nearly two euros per kilowatt, with vehicles more than five years old taxed nearly €1.50 per kilowatt.

If a vehicle is used exclusively for work-related trips, the company must declare this specifically with the Estonian Road Administration.

The Estonian Tax and Customs Board (EMTA) has said that if a company car is parked in front of a shopping mall or gym, there will be no rush to fine the owner.

"We understand very well that business today is very mobile in nature, and such parking may well be justified," explained EMTA chief tax auditor Kaia Kollo. "With each tip, we will consider our risk analysis, and if we find based on our risk analysis that there is a need to get in touch, we will contact the company and determine the circumstances involved in the vehicle's use."

Editor: Aili Vahtla

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