Riigikogu reduces car tax for families with children

TALLINN - The Riigikogu on Wednesday passed amendments to the Motor Vehicle Tax Act and the Traffic Act, which shorten the taxation period and reduce the car tax for families with children by up to 100 euros per child.

The law reduces the car tax for parents and adults with custody rights who have at least one child up to 18 years of age and an M1 or N1 category vehicle. For each child, the parent's tax liability is reduced by up to 100 euros per taxation period, but not exceeding their total tax liability. If a child has multiple parents, each of whom also owns a vehicle, the reduction is automatically divided between them.

Under the new law, if a vehicle is removed from the traffic register, the taxation period for the current year will be shortened accordingly. The tax liability is also suspended if a vehicle is temporarily removed from the register for the period it is declared wanted by the police due to theft.

The law stipulates that minibuses with more than seven seats will be taxed at the N-category rate. This reduces the motor vehicle tax for 8- or 9-seater vehicles registered in the passenger car category. Additionally, the registration fee for these vehicles will be lowered to the N-category level. As a result of the change, the average registration fee for such a vehicle is expected to drop from 2,200 euros to 530 euros, close to the minimum for the N1 category.