More and more Polish entrepreneurs are looking for new solutions for their business abroad. This is especially true for those entrepreneurs who operate internationally. In search of optimization, they are setting up new companies in countries that have a business-friendly approach, such as Estonia.
As more and more people look to register car fleets abroad, including passenger cars, more companies are being established there. While it may not be financially attractive to set up a company overseas just to obtain a passenger car, setting up a company to run a business is already a viable option. Entrepreneurs are increasingly choosing Estonia, which has an attractive tax system and a developed e-government system. It should be noted that Estonia, has a signed double taxation treaty with Poland.
Below you will find everything you need to know about registering a car in Estonia and what documents you need to provide when registering at the office.
How to register a car in Estonia?
There are different ways to register a car in Estonia, depending on who will own and use it. A car in Estonia can be registered to an individual or to a company. Individuals and company representatives should go to the Estonian Road Administration office with all the required documents to complete the registration procedure. Each of these types of registration has its own characteristics and a list of the necessary documents, actions needed to be carried out. So it is worth taking some time to properly prepare the documents before proceeding. Here we will discuss the various steps involved in registering a car in Estonia.
Residency requirements for car registration in Estonia
All persons with residence permits are required to register their vehicles in Estonia. The only exceptions are for diplomats and military personnel serving abroad. If you are working in Estonia but have a residence permit in another country, you will have to register your vehicles with the authority.
Documents required to register a car in Estonia
To register a car in Estonia you will need documents such as:
- A valid vehicle registration certificate from your country of origin
- Proof of private/company registration in the country of origin or other registration documents
- A valid insurance policy (if you are registering a car in Estonia for a company, you will need a statement that the vehicle is insured)
- Valid driver’s license or a photocopy of it (translation and international driving permit are also accepted)
- A completed application form
- A valid identity card or passport
- A passport-size photo
Company in Estonia vs. car purchase
An Estonian company can also purchase a car in another EU country, including Poland. This purchase is often more financially advantageous than buying from a dealer in Estonia. The car is purchased at a net price, as an Intra-Community Delivery of Goods (ITA). If it will be used for business purposes, Estonian VAT is charged and deducted in the same VAT return in Estonia. Thus, it is economically neutral and not subject to payment to the Tax Authority. There is no excise tax on passenger cars in Estonia. Thus, there is no excise tax on cars in Estonia. If the car was not subject to registration in Poland (first registration in Estonia) – the company may apply for a refund of the excise tax collected in Poland (depending on the car model – up to 18.6%).
Fees for car registration in Estonia
There are two sets of fees that you will have to pay to register a car in Estonia – an administrative fee and an insurance fee. The administrative fee is a one-time fee for the administrative steps involved in registering a vehicle. This fee is usually payable at the time of application. The insurance fee is a regular payment for motor insurance. The insurance fee must be paid annually. Details on registration fees can be found on the Road Administration’s website.
Taxes and car registration in Estonia
When you buy a vehicle in Poland before registration, you can deduct the excise tax included in the price of the vehicle, which is included in the price of those destined for the Polish market. If you buy a car with a capacity of less than 2,000 cc, the excise tax is not a big expense, as it amounts to 3.1% of the net value of the vehicle. The excise tax rate rises to 18.6% on the value of the vehicle if its capacity exceeds 2000 cc.
Transporting and registering the vehicle in Estonia is an expensive procedure that the dealer must arrange on his own behalf. The country’s capital, Tallinn, is more than 900 kilometers from Warsaw. If we are an EU VAT payer and our company buys the car in Poland and has it delivered to Estonia, VAT will be charged on a reverse charge basis. Since we will buy the car at the net price, we will be able to make a full charge and deduction. In Estonia, you can deduct 100 percent of the VAT on the purchase and use of the car, so the company will make a full accrual and deduction.
For a company with no history, controlled by a foreigner, it is virtually impossible to obtain financing in Estonia (and many other European countries) in the form of a lease or loan. A cash purchase is therefore the optimal solution. A technical inspection of the car, which must take place in the country of registration, is also crucial. First registration in Estonia is somewhat more difficult than in Poland, but in practice it takes no more than seven days. The first technical inspection is required within three years of the vehicle’s first registration, and subsequent inspections are conducted annually. The choice of insurers in Estonia is limited due to the country’s size, while policy prices are comparable to those in Poland.
Private vs. company car registration in Estonia – which to choose?
The best way to figure out which option is best is to look at the various application procedures. Private registration – this is the most popular option for registering a car in Estonia. It is suitable for those with a valid driver’s license, a clean driving record and a vehicle that has not been registered before. Corporate registration – This option is suitable for those who have a valid registration from their home country and wish to transfer it to Estonia.
How can we help you?
Thompson&Stein law firm specialists offer assistance in:
- Organization of the vehicle registration test (a mandatory part of the registration)
- Registration of the vehicle in Estonia – also with the help of our attorney. We also assist in obtaining special and individual plates.
- Purchase of appropriate liability and AC insurance
- Application for reimbursement of excise tax directed to Polish tax authorities.
- Correct settlement of the purchase and use of the vehicle in your Estonian company.
Remember that the registration process can take some time, especially if you are applying for private registration. So it’s better to start as soon as possible to avoid unnecessary delays. Remember to gather the required documents and make an appointment at the Road Administration office. The sooner you start, the sooner you will be able to drive your car freely on Estonia’s roads!
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