Estonian Parliament adopted on 19 June 2024 changes to the land tax legislation, according to which local municipalities will obtain from 2025 and 2026 more rights of decision upon determining the land tax liability in the respective municipality. Also, the maximum limit to the rise of annual land tax liability will be increased.
From 2025, the maximum land tax rate on residential land and yard land of agricultural land will be increased from 0,5% to 1% of the taxable value of such land. Also, the maximum land tax rate on so-called other land, including business land, production land and transportation land, will be increased from 1% to 2% of the taxable value of land. This does not mean that these tax rates will increase automatically, as councils of local municipalities should adopt respective land tax rates. Probably, this change in maximum land tax rates affects primarily Tallinn and its suburbs, where there is more motivation to increase existing land tax rates.
In 2025, the maximum limit to the rise of annual land tax in Estonia is generally up to 50%, but the fixed limit of 20 euros applies, when the 50% increase of the land tax is less than 20 euros.
The land tax in the amount of up to 100 euros will be payable by 31 March. The land tax, which exceeds 100 euros, will be payable as follows:
- Half of it, but not less than 100 euros, will be payable by 31 March;
- The other part of such land will be payable by 1 October, at the latest.
From 2026, local municipalities can establish the maximum limit to the rise of annual land tax liability in the range of 10% and 100%. The land tax cannot exceed the amount calculated on the basis of taxable value of land and the rate of land tax.
From 2026, the general area-based incentive for individuals in respect of their residential land will be abolished nationwide in Estonia. Instead, councils of local municipalities will be entitled to determine on the application of the residential land incentive in their land tax regulations, which may prescribe tax exemption (up to a maximum of 1000 euros) in respect of residential land by the 1 October of the year preceding the tax year.