The allowance will be automatically applied by the Estonian Tax and Customs Board retroactively also to the already paid tax part, and individuals do not need to do anything themselves to apply the allowance. The tax authorities will issue new tax notices in cases where an individual still has a reduced tax liability after the allowance has been applied. The part of the annual tax that has been overpaid due to the allowance will be refunded by the tax authorities to the individuals' prepayment account in e-MTA. Any individual can request the money in this account to be transferred to their bank account or leave it in the prepayment account to cover other future tax liabilities.
If a child has multiple parents, the annual tax allowance amount will be divided equally between the parents. If a parent's tax liability is less than the amount reducing that tax liability, the remaining amount reducing the tax liability will be divided among the other parents.
The MTA will also automatically shorten the tax period for any vehicles removed from the traffic register based on the traffic register data, retroactively reducing the tax liability up to the date of the entry of the vehicle's removal from the traffic register.
In addition, starting from 1 January 2026, the annual tax and registration fee for M1 category motor vehicles with more than seven seats will be significantly reduced. According to the amendment, such motor vehicles will be taxed from 2026 onwards at the N1 category motor vehicle tax rate. Also, from 2026, the registration fee for these vehicles will be calculated based on the N1 category vehicle registration fee rate.
Further information about the motor vehicle tax can be found in website of the tax authorities.
If anything still feels unclear or you have questions about any tax-related topic, book a consultation and we’ll help you get a clear understanding of your situation.
