Land tax is a tax based on the taxable value of land calculated by the Estonian Tax and Customs Board on the basis of information received from the corresponding local government and it is fully paid into the local government budget.
1. Who shall pay land tax
According to the Land Tax Act, land tax shall be paid:
1.1. by the owner of land or
1.2 unless land use is re-registered pursuant to the procedure prescribed by the Land Reform Act, the land use shall be paid by users of land;
1.3 upon the constitution of the right of superficies in land, land tax shall be paid by the superficiary instead of the owner of land;
1.4 upon the constitution of the right of a usufruct in land, land tax shall be paid by the usufructuary instead of the owner of land;
1.5 if an immovable in state or municipal ownership is granted for the extraction of mineral reserves, land tax shall be paid by the person who obtains the right to use land.
The state shall continue to pay land tax on the land in state ownership, if an application for the return, replacement or compensation of the land is submitted or which is compensated but nobody has taken it into use or if an application for the return, replacement or compensation of the land is not submitted and nobody has taken it into use.
2. Object of land tax
Land tax is imposed on all land, except:
- land where economic activities are prohibited by law or pursuant to the procedure provided by law;
- land of strict nature reserves and special management zones of protected areas and land of special management zones of species protection sites;
- land adjacent to buildings of diplomatic missions and consular representations of foreign states or parts thereof;
- land in the use of a foreign state or international organisation on the basis of an agreement entered into between the Government of the Republic and the foreign state or international organisation;
- land under places of worship of churches and congregations;
- municipal land under the jurisdiction of a corresponding local government, except in the case the land is used by the person whose land use is not yet re-registered pursuant to the procedure prescribed by the Land Reform Act or the land is encumbered with a right of superficies or a usufruct.
- land under public water bodies, water bodies for public use and public roads;
- land in the use of headquarters of the allied troops;
- land in state ownership with intended purpose of public construction works land;
- land with intended purpose of public land (incl. land of cemeteries).
Land tax in the amount of 50 per cent of the rate of land tax is paid on land of limited management zones, land of special conservation areas, land of limited management zones of species protection sites and land of limited management zones of individual natural objects provided for in the Nature Conservation Act.
3. Tax rate
The tax rate of land shall be 0.1 to 2.5 per cent of the taxable value of land annually.
The rate of land tax for areas under cultivation and for natural grasslands shall be 0.1 to 2.0 per cent of the taxable value of the land annually.
The local government council shall establish the tax rates on its administrative territory not later than by 31 January. The local government council may establish the rates of tax as a differentiated rate according to the value zones within the range specified by law. The amended tax rates shall apply as of the beginning of the year.
4. Submission of information by a corresponding local government
If the tax rates are amended, the local authority shall enter the amended land tax rates in the land tax information system (MAKIS) by 1 February of the taxation year. If the local government has not submitted the amended tax rates by 1 February, the Estonian Tax and Customs Board shall calculate the land tax according to the rates that were valid during the previous year.
The local authority shall submit to the Estonian Tax and Customs Board in addition to the tax rates also necessary basic data for calculation of land tax through the Land tax information system (MAKIS) by 1 February of the tax year.
5. Creation of tax liability
The Estonian Tax and Customs Board shall take the existing right of ownership or the right of use as the basis for the purpose of determining the land tax liability as at 1 January of the taxation year. The Estonian Tax and Customs Board shall issue a land tax notice to the person who is the owner of land or the user of land as at 1 January (persons listed in items 1.2 to 1.5 of this instruction). Upon acquisition of land or creation of right of use in the middle of a year, the land tax liability of the former owner or user shall be valid until the end of the year and the tax liability of the new owner or user is created as of 1 January of the year following the creation of the right of acquisition or use of the land.
6. Land tax incentive for land under home
For the application for land tax incentive to the land under home, four facts needed to be present simultaneously as of 1 January:
- the person must be the owner or user of the land for the purposes of § 10 of the Land Tax Act (persons listed in items 1.1 to 1.4 of this instruction);
- the land must be with intended purpose of residential land or with intended purpose of profit-yielding land which comprises the land use type of yard land;
- a building shall be located on the land;
- the permanent residence of the owner or user of the land shall be in the building located on this land pursuant to the residence data entered in the population register.
The residential land or the profit-yielding land in the part of the land use type of yard land only shall be exempt from land tax to the extent of 0.15 hectares in a densely populated area (i.e. in cities, in cities without municipal status, towns, small towns and areas designated densely populated areas by a comprehensive plan by a local government of a county plan by a county governor) and to the extent of 2.0 hectares elsewhere.
The joint and co-owners of the land unit shall be exempt from the payment of land tax on the abovementioned conditions on residential land or the profit-yielding land in the part of the land use type of yard land to the extent of 0.15 hectares in a densely populated area and to the extent of 2.0 hectares elsewhere. This provision does not apply to apartment ownership, i.e. tax exemption in an apartment association is calculated on each apartment ownership.
Natural persons considered as members of a building association are also treated as the user of land. Thus, the residential land of a building association shall be exempt from the obligation to pay land tax to the proportional part of the contribution of such members of the building association who are natural persons and whose residence pursuant to the residence data entered in the population register is in the building located on this land to the extent of 0.15 hectares in a densely populated area and to the extent of 2.0 hectares elsewhere per each member of the building association compliant with the above characteristics.
The owner of the land and the user of the land mentioned in § 10 of the Land Tax Act need not to submit an application to receive tax incentives. Tax incentive shall be calculated automatically.
7. Payment of land tax
Land tax up to 64 euros on any land located in the local government unit shall be paid all at once by 31 March.
At least half of the land tax, which exceeds 64 euros, shall be paid by 31 March, but no less than 64 euros. The remaining part of the land tax shall be paid not later than by 2 October 2017.
The Estonian Tax and Customs Board shall issue a tax notice to a tax payer concerning the amount of land tax due not later than by 15 February. A land tax notice shall be sent by electronic means only to the user registered in the E-Tax/e-Customs and whose e-mail address is known to the tax authority. It means that the tax authority shall send the information to the person’s e-mail address about the availability of the tax notice in the E-Tax.
Land tax shall not be imposed and a tax notice shall not be issued if the amount of tax is less than 5 euros.
A taxpayer who has not received a land tax notice of the taxation year by 25 February is required to notify the Estonian Tax and Customs Board thereof within thirty days. In that case a new tax notice shall be issued to the taxpayer.
If a taxpayer has received no land tax notices, the taxpayer is required to notify the rural municipality government or city government of the location of the land in writing or electronically of the size and intended use of the land in the ownership or use of the taxpayer.
If the information about the land use subject to taxation or the data about the taxpayer in the tax notice are incorrect, the taxpayer shall have to turn to the city government or rural municipality government of the location of the land for the specification of the data.
Payment of land tax is checked by the Estonian Tax and Customs Board.