Estonian car dealers register SUVs as motorhomes to avoid tax

In Estonia, car dealers and private individuals commonly register new SUVs as motorhomes to reduce first-time registration tax costs by up to 2-3 times. The Transport Authority acknowledges the scheme is legal, but notes that the legislation needs clarification. After initial registration, the vehicle category can be changed without paying the tax difference.

In Estonia, car dealers have found a legal but controversial way to reduce first-time registration tax: expensive SUVs are registered as motorhomes, allowing tax bills to be cut by two to three times.

How the scheme works

When calculating first-time registration tax, motorhomes are not assessed based on vehicle weight, so the final tax amount is significantly lower than for a standard car. Silver Havamaa, director of Mobile Autokeskus, explained that these are certainly not cheap vehicles.

"Naturally, these vehicles are not used as motorhomes in most cases. From a business owner's perspective, the situation looks like this: the state fails to ensure equal business conditions. If a buyer is looking for a specific vehicle and one seller can offer it several thousand euros cheaper, the choice is simple. The consumer looks at the final price," Havamaa said.

Transport Authority: the law is flawed

Jurgo Vahtra, head of the Transport Authority's vehicle engineering unit, confirmed that the authority is aware of such schemes, but they do not violate current legislation. To be registered as a motorhome, a vehicle must have sleeping facilities and permanently installed equipment, such as cooking utensils, a sink, and storage compartments.

"Some SUVs do indeed have an additional kit installed with permanently mounted cooking equipment, storage compartments, a sink, and of course sleeping facilities," Vahtra explained.

Havamaa drew a comparison with Finnish legislation, which regulates the concept of a motorhome much more precisely. "Finland has special requirements for motorhomes-for example, the minimum interior height must be 1 metre 85 centimetres so a person can stand. Our law has no such requirement," he noted.

Technical inspection and category change

The scheme is not entirely risk-free: if a vehicle is registered as a motorhome, the required equipment must also be present at technical inspection. According to Vahtra, vehicles lacking the required equipment are returned to the traffic register for clarification of data, after which either the data must be corrected or the equipment reinstalled.

However, there is one critical loophole in the law: after initial registration, the owner can change the vehicle category from motorhome to standard car without having to pay the tax difference. This is precisely what makes the scheme attractive for car dealers.

--