Overview of legislation that entered into force on January 1
The Estonian Chamber of Commerce and Industry prepared an overview of the most important legislative changes for companies that entered into force on January 1. In total, nearly 300 legal acts entered into force on the first day of the new year.
The value added tax rate increased to 22%
From January 1, the standard VAT rate will be 22% instead of the previous 20%. In the case of a cash-based VAT person, if the buyer was invoiced and the goods were sent or made available or the service was provided before January 1, 2024, 20% VAT will apply. In addition, there is a distinction for contracts concluded before May 1, 2023. Until December 31, 2025, it is allowed to apply a 20% VAT rate based on a written contract concluded before May 1, 2023, if the relevant contract stipulates that the goods or the price of the service includes VAT or a 20% VAT is added to the price, and the contract does not provide for a price change resulting from a possible change in the VAT rate. Due to the change in the VAT rate, the forms of the VAT return also change.
More info: Value-Added Tax Act, Amendment of the regulations of the Minister of Finance related to the amendment of the VAT Act, 5 questions and answers about the VAT rate increase from the new year
The minimum wage increased to 820 euros
From 2024, the minimum wage increased from 725 euros to 820 euros per month for full-time employment. From January 1, the minimum hourly rate is 4.86 euros (currently 4.30 euros). The minimum wage increase will affect nearly 40,000 employees.
More info: Minimum salary for 2024
From this year, the Labour Inspectorate applies a new interpretation of rest time
From January 1, the Labour Inspectorate will start to supervise the requirements of working and rest time based on the new interpretation of weekly rest time set out in the resolution of the European Court. According to the court resolution, the daily rest period is not part of the weekly rest period, but must precede the weekly rest period. According to the new interpretation, employees with a schedule must be given 47 hours of uninterrupted rest time once a week instead of the previous 36 hours, and for other employees it must be at least 59 hours instead of the previous 48 hours. Until now, the working and rest time requirements have been considered fulfilled if the employee gets 36 or 48 hours of weekly rest time once in seven days without being preceded by a daily rest period of 11 hours. Due to the new interpretation, employers whose employees work according to a schedule must review the calculation of employees' working and rest time requirements.
Considering the resolution of the European Court, the Chamber proposed to change the wording of the weekly rest period regulation provided for in the Employment Contracts Act in such a way that the daily consecutive rest period for a scheduled employee together with the weekly consecutive rest period is at least 36 hours and for other employees at least 48 hours, but this proposal was not considered at the moment.
More info: Explanation of the Labour Inspectorate, Chamber's proposal to amend the law
The minimum social tax liability increased
From 2024, the monthly rate based on the minimum social tax liability is 725 euros. This means that the employer must pay social tax of at least 239.25 euros per month for the employee's social insurance to be established. Generally, this amount must be paid even if the employee works part-time. The change concerns employees whose salary is below 725 euros. In addition, the change affects board members who want health insurance. This means that the board members will have to pay 239.25 euros instead of the previous 215.82 euros to get health insurance.
More info: State Budget Act of 2024
The tax on land must not increase by more than 10% per year
In 2022, a regular land assessment took place, and the results of the 2022 land assessment will be used in the calculation of the land tax for 2024. To avoid a sudden increase in land tax caused by the assessment of land or by the increase in tax rates, 10% of the previous year's land tax amount is permanently established as the annual permitted increase of land tax. This means that no matter how high the calculated land tax is with the new land tax price and tax rate, the land tax cannot increase by more than 10% per year. The limit on the annual growth of the land tax ensures that in the following years the land tax increases gradually until it reaches the amount of land tax based on the land tax price and the land tax rate.
More info: Land Tax Act
Road usage fee for trucks increased
Amendments to the Traffic Act entered into force on January 1, which will increase the road usage fee for trucks from January 1, 2024. The fee increases more for trucks that are more polluting and heavier. From the new year, the daily road usage fee rate will be between 13-40 euros (currently 9-12 euros) and the annual road usage fee rate will be between 680-2,000 euros (currently 500-1,300 euros). The road usage fee rate continues to depend on the gross weight of the truck and its trailer, the EURO emission class, and the number of axles. It is still possible to pay the road usage fee for a week, month, or quarter. As a result of the increase in the road usage fee, the revenue received from the road usage fee is expected to increase by 11.8 million euros, and this money will be directed to the maintenance of the transport infrastructure. In addition, from the new year, fines will increase for those persons who allow others to drive or drive a truck by themselves without paying the road usage fee or if the road usage fee has been paid in a smaller amount.
More info: Traffic Act
The immigration quota decreased
The immigration quota for 2024 is 1,303, which is four persons fewer than last year. This is the maximum amount that the Aliens Act allows to be established at the moment. Next year, the immigration quota will be divided according to the fields as follows: 200 fixed-term residence permits for work in the field of transportation and storage, 35 residence permits for foreign journalists, 34 residence permits for the sports field, 15 residence permits for the tourism field, 5 residence permits based on foreign agreements, and the remaining 1,014 residence permits are freely distributed.
More info: 2024 immigration quota, Distribution of the immigration quota, The immigration quota for 2024 and its distribution across sectors has been revealed
Some packaging companies are obliged to bear additional costs
As of January 1, packaging companies that place on the market single-use plastic food packaging, flexible material packages and packaging materials, beverage packaging, beverage cups and thin plastic carrier bags are obliged to bear several additional costs.
The additional costs are related to the costs of collecting the waste generated from the previously mentioned packages placed into public trash bins and the further transportation and handling of this waste, as well as the costs of cleaning the garbage generated from these products and its further transportation and handling. Public trash bins are defined as trash bins managed by public sector institutions and located in public spaces. For example, a packaging company that sells a hot drink to a consumer in a plastic (including plastic) drinking cup at the point of sale must bear the costs incurred if the consumer after consumption, throws this drinking cup into a trash bin in a public space, or into nature. In the past, this cost has been borne by local governments.
However, the Packaging Act states that the above-mentioned costs may not exceed the costs necessary for the cost-effective provision of the provided services. In addition, the law states that costs must be determined in a transparent manner between the relevant parties. In the case of garbage collection costs, it must be limited to the activities of public sector authorities or those authorized by them. According to the Packaging Act, the Minister of Climate must establish by regulation the methodology for calculating costs and the procedure for determining them, but at the moment no such regulation has been established.
More info: Packaging Act
Companies must provide more information on packaging and packaging waste
From January 1, companies that launch single-use plastic food packaging and drinking cups on the market for the first time in Estonia must keep records of such food packaging and drinking cups. Food packaging and drinking cups made entirely and partly of plastic must be accounted for separately. In the case of food packaging and drinking cups partially made of plastic, data must be provided on the total weight of this kind of packaging and the weight of plastic contained in the packaging.
According to the Packaging Act, a single-use plastic food package is a container with or without a lid from which ready-made food is offered on-site or for takeaway, which is usually consumed from the same container without additional cooking, boiling, or heating. For example, such food packaging includes fast food packaging, salad boxes or packaging containing fresh or processed food that does not require further preparation, such as fruit, vegetables, or desserts. Thus, the change concerns, for example, the food industry, retail companies and the catering sector.
While the Ministry of Climate initially proposed that companies could keep records of disposable plastic food packaging and drinking cups based on pieces, at the suggestion of the Chamber, this idea was abandoned and the regulation stated that records are kept based on weight.
In addition, the Packaging Act and the Bylaws of the Packaging Register require that starting from the new year, the weight of single-use plastic drink bottles placed on the Estonian market and the weight of recycled plastic contained in them must also be kept. Separate records must be kept for beverage bottles, the main component of which is polyethylene terephthalate (so-called PET bottles), and other plastic beverage bottles.
According to the Bylaws of the Packaging Register, companies must submit the aforementioned data by March 31, 2025, but the data must be for 2024. Therefore, companies must start keeping the corresponding records from the beginning of 2024.
More info: Packaging Act, Bylaws of the Packaging Register
Food and veterinary inspection fees increased
From 2024, the hourly fee rates charged for performing food and veterinary inspection operations increased by 25%. The hourly fee for food supervision is 35.74 euros, and the fee for veterinary supervision is 22.3 euros instead of the current 17.85 euros. Initially, the ministry wanted to increase the fee rates by 40% and 85%, respectively, but the ministry decided to increase the fees on a smaller scale.
More info: Rate of hourly fee charged for performing food, feed and veterinary supervision operations in 2024
Excise duty rates on alcohol and tobacco products increased
The excise rate on alcohol products increased by 5% from January 1, and the same increase will occur in 2025 and 2026. Also, the excise rate on tobacco products, including cigars, cigarillos, and e-liquids, will increase by 5% from the new year.
More info: Alcohol, Tobacco, Fuel and Electricity Excise Duty Act
State fees increased
From 2024, the state fee rates related to environmental protection permits and the maritime sector and land transport, as well as the state fee rates charged for actions performed based on the Railway Act, the Construction Code, the Recognition of Professional Qualifications, and the Electronic Communications Act, will increase. The most expensive environmental permits, such as the special use permit for water and the permit for the handling of pollutants, waste, and the permit for the transfer of pollutants from a local source of pollution to the outside air, will increase approximately four times from the current level of 520 euros to 1,990 euros. In addition, the valuation of the complex environmental permit will become more complicated than before, and will increase four to five times from the current level of 1,240 euros.
More info: State Fee Act
There is now an opportunity to issue a complex permit on time
At the beginning of December, the Parliament of Estonia adopted an amendment to the Industrial Emissions Act, according to which there will soon be a possibility to issue a complex permit on time. A complex permit can be granted for a fixed period if there are circumstances justified from the point of view of environmental protection. The granting of a fixed-term complex permit can also be applied to the procedure of a complex permit application submitted before the entry into force of this amendment, except for the procedure for changing a complex permit. A fixed-term permit gives the entrepreneur the certainty that if he/she meets the climate goals stipulated in the law, he/she can operate until the deadline specified in the permit, taking into account the provisions of the legislation. At the moment, it is not known exactly when the amendment will enter into force, because the president has not yet announced the draft. If that happens, the changes will come into effect in late December or January 2024.
More info: Amendment of the Industrial Emissions Act
A new Labor Market Measures Act came into force
On January 1, the Labor Market Measures Act came into force, replacing the current Labor Market Services and Support Act. The main goal of creating the new law is to organize and simplify the system of labour market services and benefits, because currently the legal framework of labour market measures is scattered in various legislation. The new law does not contain any significant changes compared to the current law. For example, the new law does not introduce new labour market services and subsidies, nor does it expand the circle of persons entitled to labour market measures.
The Labor Market Measures Act contains more general rules for labour market measures, i.e. labour market services and supports, for example, the list and objectives of labour market measures. In total, the new law contains ten different labour market measures: information on the labour market situation and labour market services and supports, employment mediation, career services, work-oriented counselling, skills development, support for entrepreneurship, support for work readiness, support for work ability, support for starting and remaining in work, and support for participation in labour market services. From now on, the more detailed content of the labour market measures will be written in the employment program.
For example, while the current law states very precisely what is meant by support for starting a business, the new law only states that one of the labour market measures is business support, the purpose of which is to support a person starting a business and ensure the sustainability of this activity. From the new year, the employment program contains more detailed conditions of support for starting a business.
More info: Labor Market Measures Act, Employment program 2024-2029
Several changes in the Law of Obligations Act came into force
The main change is that in the Law of Obligations Act, spouses are equated with registered partners. If the Law of Obligations Act previously included the principle that the right of pre-emption cannot be used when selling a thing to a descendant or ascendant relative or spouse of the seller, then from 2024 the right of pre-emption cannot be used even if the thing is sold to a registered spouse.
More info: Law of Obligations Act
The European Union's emissions trading system was extended to shipping
From 2024, the European Union emissions trading system will also be extended to shipping. This means that shipping companies must start buying allowances to pay for the CO2 emissions they produce. The change concerns larger ships, i.e. ships with a total tonnage of at least 5,000 tons, regardless of the ship's flag state. The new system concerns those large ships that stop at EU ports. As a result of the change, the price of ship transport will slightly increase.
More info: European Union regulation
From 2024, the maintenance fee for utility networks will increase
From January 1, the amount of maintenance fee, which the owner of a utility network or facility must pay for maintenance of utility networks to the owner of the property, increased. The increase is due to the assessment of the land carried out in 2022. The increase in maintenance fees will be implemented over a period of three years, where in the first two years the fee will increase by up to 33% and in the third year by up to 66% according to the difference between the maintenance fees calculated as a result of the assessment of the land’s taxation prices in 2022 and 2001. At the same time, starting from the new year, the maintenance fee will decrease from the current 7.5% to 3.5% of the value of the land, multiplied by the coefficients of the spatial and substantive extent of the constriction.
More info: Law of Property Act Implementation Act
People will be able to increase their contributions to the second pillar of their pension
From 2024, all people who have joined the second pension pillar will be able to apply to the Pension Centre or their pension fund to increase their current 2% funded pension payment rate to 4% or 6%. For its part, the state continues to add 4%. If a person submits a corresponding application no later than November 30, 2024, the higher contribution rate will apply from 2025. A person can change the rate of accumulated pension payment once a year. For the employer, the change means that at the beginning of each year it is necessary to check whether the employee has increased the rate of his/her second pillar contribution, or if he/she has reduced the previously increased rate. The employer can check this at the Pension Centre website.
More info: Funded Pensions Act
Gambling tax rates increased
As of January 1, several gambling tax rates increased. For example, the gaming table tax rate will increase by nearly 10%. The lottery and commercial lottery tax rate will increase from the current 18% to 22%. The gambling tax on toto and games of chance and games of skill as remote gambling, will increase from the current 5% to 6%.
More info: Gambling Tax Act
The foreigner's registered life partner received the same rights as the foreigner's spouse
From 2024, it is allowed to issue a temporary residence permit to a foreigner to live with a registered partner. Previously, there was no such possibility in the law. The same requirements as apply today to the spouse of a foreigner will apply to the residence permit of the registered partner. For example, a residence permit granted to a foreigner's registered partner does not count under the immigration quota. In addition, starting from the new year, it will be possible to issue a visa to the foreigner's registered partner under the same conditions as in the case of a visa granted to a foreigner for short-term work or study in Estonia. Currently, this is allowed for a foreigner's spouse, but not for a registered partner.
More info: Aliens Act