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At the sitting that started at 2pm on Wednesday and lasted until early Thursday morning, the Riigikogu passed an Act and concluded the second reading of the Motor Vehicle Tax Bill and seven other Bills.

The Riigikogu passed the Market in Crypto-assets Act (398 SE), initiated by the Government. It brings crypto-asset service providers and issuers of crypto-assets under the supervision of the Financial Supervision Authority. The Act affects the virtual currency service providers who are already operating as well as new entrants to the market in crypto-assets.

Last year saw the entry into force of the EU’s “MiCa Regulation” which allows crypto-asset service providers to offer their services under the same rules in all Member States. The Act will ensure proper national implementation of the Regulation. The aim of the Regulation is to support innovation and fair competition, while at the same time ensuring adequate investor protection and the integrity of crypto asset markets. The Regulation regulates for example the granting of authorisation to crypto-asset market participants, the organisation of their management, the requirements for capital, the obligation to act honestly, fairly and professionally in the best interests of clients, the safekeeping of clients’ crypto-assets and funds, complaints-handling, and the management of conflicts of interest.

At present the crypto-asset service is called virtual currency service. In the future, instead of virtual currency, a broader definition of crypto-asset will be in place and in order to continue activities in the field, they will have to be brought in line with the requirements arising from the MiCa regulation and a crypto-asset service authorisation will have to be obtained from the Financial Supervision Authority. The Act provides additional provisions for the exercise of supervision which are analogous to the regulations provided in other Acts concerning the financial sector and thereby equal treatment of asset classes will be ensured.

In the course of the second reading, an amendment was incorporated into the Bill to extend the period of transition to new requirements by six months. This means that market participants will have to transfer to the requirements set out in the Regulation by 1 July 2026 at the latest.

During the debate, Andrei Korobeinik from the Centre Party Group, Urmas Reinsalu from Isamaa Parliamentary Group and Varro Vooglaid from the Estonian Conservative People’s Party Group took the floor.

52 members of the Riigikogu supported the passing of the Act and 19 were against.

Eight Bills passed the second reading

The Motor Vehicle Tax Bill (364 SE), initiated by the Government, passed the second reading in the Riigikogu. According to it a two-component motor vehicle tax will be established in Estonia from the beginning of next year. According to the Bill, the tax will consist, first, of a component to be paid by motor vehicle owners on an annual basis on vehicles registered in the motor register. The rate of vehicle tax for passenger cars will consist of a base component, a specific CO2 emissions component and a gross weight component. Second, a motor vehicle registration fee will be established which will be paid upon the registration of passenger cars and vans in the motor register.

The purpose of the motor vehicle tax will be to direct people to make more environmentally friendly choices when acquiring new vehicles and to support the use of old cars until the end of their useful life. The tax will make the acquisition and ownership of passenger cars 5 to 15 percent more expensive compared to today.

According to the Bill, emergency vehicles, vehicles belonging to private persons which have been converted or adapted for use by disabled people and, on the basis of international agreements, vehicles of foreign missions will be exempt from the motor vehicle tax and the registration fee. According to the Bill, the Tax and Customs Board will collect the motor vehicle tax and the Transport Administration will collect the registration fee.

In the course of the second reading, two fundamental amendments were made to the Bill. First, the registration fee will also have to be paid when a vehicle already registered in the Estonian motor register changes ownership for the first time. Second, the fee for passenger cars and vans of legal persons will also begin to decrease as the vehicle ages.

An amendment stipulates that, in addition to the first registration of a vehicle, the registration fee will also be payable on the first change of ownership of a vehicle, provided that no registration fee has been paid previously for that vehicle. The amendment will also reduce the fee rates so that the average registration fee will be less than 10% of the approximate value of the vehicle. According to the Bill, the rates of the registration fee will increase in 2028 and 2031.

No registration fee will be payable when a person purchases a vehicle from a leasing company and registers it in their name, or when a person inherits a vehicle and registers it in their name. For such vehicles, the registration fee will be applied in the event of a next sales transaction. According to an amendment, it will be possible to apply for a refund of the registration fee for vehicles up to 10 years old that are taken out of the country. The age of the vehicle will reduce the amount of both the registration fee and the motor vehicle tax for both natural and legal persons and for both passenger cars and vans.

During the debate, Andrei Korobeinik, Anastassia Kovalenko-Kõlvart, Aleksandr Tšaplõgin, Vadim Belobrovtsev and Aleksei Jevgrafov from the Centre Party group, Priit Sibul, Helir-Valdor Seeder, Andres Metsoja, Mart Maastik, Urmas Reinsalu and Aivar Kokk from Isamaa Parliamentary Group, Rain Epler, Helle-Moonika Helme, Arvo Aller, Kert Kingo, Henn Põlluaas, Siim Pohlak, Rene Kokk and Varro Vooglaid from the Estonian Conservative People’s Party group and Tiit Maran from the Social Democratic Party Group took the floor. Unaffiliated Member of the Riigikogu Kalle Grünthal also made a speech.

The Estonian Conservative People’s Party Group, Isamaa Parliamentary group and the Centre Party Group moved to suspend the second reading of the Bill, but the plenary did not support the motion. 21 members of the Riigikogu supported suspension and 47 voted against.

The Bill on Amendments to the State Fees Act and Amendments to Other Associated Acts (417 SE), initiated by the Government, passed its second reading. According to it, several state fee rates in the area of government of the Ministry of the Interior will rise from the beginning of 2025. According to the explanatory memorandum, the fee rates have been staying at the same level for years and no longer cover the costs relating to the acts performed.

The Bill will amend the rates of the state fees for applications for the acquisition and restoration of citizenship and release from citizenship, applications for identity documents, applications for residence permits, for long-stay visas and for the registration of short-term employment, population register acts and acts performed under the Weapons Act and the Security Activities Act.

For example, according to the Bill, the state fee paid upon applying for an ID card will rise from 30 euro to 45 euro, and the fee upon applying for a passport will rise from 45 euro to 60 euro. The state fee for entries concerning marriage will increase from 30 euro to 70 euro and the fee for entries concerning divorce will increase from 50 euro to 90 euro. Reduced state fees will continue to apply for children, pensioners, disabled people and, in the case of travel documents, beneficiaries of international protection.

Before the second reading, the Legal Affairs Committee had incorporated into the Bill an amendment according to which the rates of the state fees for applications and acts relating to weapons permits and weapons would be increased less than had originally been planned. By way of derogation, the rate of the fee for the review of an application for a weapons dismantling permit, permit for conversion of weapons, permit for rendering weapons inoperable and permit for the establishment of the compliance of the weapon with the deactivation requirements will be increased by 10 euro.

During the debate, Liisa Pakosta from Estonia 200 Parliamentary Group, Vadim Belobrovtsev and Anastassia Kovalenko-Kõlvart from the Centre Party Group and Helir-Valdor Seeder from Isamaa Parliamentary Group took the floor.

The Centre Party Group and Isamaa Parliamentary Group moved to suspend the second reading of the Bill, but the motion was not supported. Six members of the Riigikogu supported suspension and 34 were against.

The Bill on Amendments to the Penal Code and Amendments to Other Associated Acts (increasing the fine unit) (415 SE), initiated by the Government, passed the second reading. According to it, the amount of the fine unit that is the basis for imposing fines provided for in the Penal Code will be doubled, that is, it will rise from four euro to eight euro, from the beginning of 2025. According to the explanatory memorandum, the amount of fine unit has not been changed for over 20 years.

According to the Bill, the calculation of the amount of the fine will become more flexible, as instead of the current minimum of three units, a fine to the extent of one fine unit can also be imposed for a misdemeanour. Under the Bill, the maximum amount of fine applied for a misdemeanour will rise from 1,200 euro to 2,400 euro.

At the same time, the Bill will create an exception for minors. When imposing fines on them, half the rate of the fine will have to be taken as the basis. This means that while the Act provides for a fine of up to 300 fine units as the maximum permitted punishment, it will be possible to impose a fine of up to 150 units on a minor for the same offence.

The Traffic Act will stipulate that if the speed limit is exceeded, the basis for calculating a cautionary fine will be seven euro instead of the current five euro. In connection with that, the maximum cautionary fine allowed under the written caution procedure will increase from 300 euro to 420 euro. The maximum deterrent fine applied in alternative proceedings will increase to 160 euro, while the Bill also introduces the possibility to apply for payment of a deterrent fine in instalments.

During the debate, Anastassia Kovalenko-Kõlvart from the Centre Party Group took the floor.

The Centre Party Group moved to suspend the second reading of the Bill, but the motion was not supported. Four members of the Riigikogu supported suspension and 31 voted against.

The Credit Collectors and Purchasers Bill (376 SE), initiated by the Government, passed its second reading. It regulates the activities of debt collection agencies engaged in credit agreements and the persons linked to them and will bring the activities of debt collection agencies under the control of the Financial Supervision Authority.

When the Act enters into force, debt collection agencies will have to begin to apply for an authorisation from the Financial Supervision Authority and the Financial Supervision Authority will receive powers to exercise supervision over credit collectors. In addition, the Bill will also give the Supervision Authority various sanctioning powers starting from issuing precepts to misdemeanour proceedings. For the second reading, the Legal Affairs Committee had incorporated an amendment into the Bill to reduce the maximum amount of penalties from 300,000 euro to 100,000 for natural persons and from three million to one million euro for legal entities.

The Bill provides that the minimum capital requirement for a debt collection agency is 25,000 euro and provides for the rules as to how credit collectors will have to hold the funds received from debtors. Integrity requirements for managers and owners of credit collectors will also be provided. Amongst others, a requirement will be established that persons who have earlier engaged in usury cannot be managers of credit collectors.

The scope of regulation of the Bill includes debt collection agencies that are engaged in the collection of debts arising from loans granted by banks and other creditors, or in the factoring of such debts. It is expected that the Act will apply to a larger part of the Estonian debt collection market, estimated at seven to eight debt collection agencies operating in Estonia.

The Bill on Amendments to the Security Activities Act (413 SE), initiated by the Legal Affairs Committee, passed the second reading. Its aim is to resolve the shortcomings identified in the Security Activities Act due to enter into force on 1 July this year. The Bill will omit from the scope of application of the Act the internal security organisers who have not hired a security guard or a security firm but use only technical means and their own staff to guard their property. According to an amendment, in the future, they will not have to meet the same requirements as security firms, including the requirement to have completed specialised training.

Under another amendment, the current procedure will remain in place where security firms must store for one month the recordings of the technical means used when guarding and protecting the object to be secured and when maintaining order. The Act due to enter into force this summer contains a provision that would require recordings to be stored for six months. According to an amendment, the six-month storage obligation will remain in place only for the cases where an act containing elements of offence is identified when processing the recording.

In addition, the Bill will introduce in the Act a specifying provision establishing an explicit requirement for security officers to complete, in addition to continuing training, studies for either guard, security guard or security manager, respectively.

The Bill on Amendments to the Aviation Act (436 SE), initiated by the Government, passed its second reading. Its aim is to organise the legal landscape for military aviation. The Bill will allow the Estonian Military Academy and the Estonian Aviation Academy to cooperate from the new academic year. The Military Academy wishes to start training in aircraft piloting and to procure a service regarding pilot training from the Aviation Academy. For this, it is necessary that the Minister of Climate be able to grant the Aviation Academy the right to train the Military Academy cadets under its certificate.

Provisions delegating authority will also be organised in the Act so that the necessary areas can be properly regulated in military aviation Regulations. Among other things, defence industry companies will have the opportunity to expand their activities in the field of military aviation, as the unit engaged in the supervision of military aviation within the composition of the Defence Forces will be able to grant them the relevant certificates to provide a service or sell a product, such as an unmanned aerial vehicle or its parts.

The Bill on Amendments to the Energy Sector Organisation Act and Other Acts (356 SE), initiated by the Government, passed the second reading. It will transpose the principles and obligations facilitating the promotion of renewable energy arising from a European Union directive. They will help achieve the EU’s energy policy objective of increasing the use of sustainable and renewable energy. The amendments will concern in particular plants producing biofuels, bioliquids and biomass fuels from biomass or using them for energy production. The majority of the directive has been transposed into Estonian legal space in 2022.

In the light of a reasoned opinion of the European Commission, the Bill will provide for additional conditions arising from the directive on the basis of which energy produced will be counted as renewable energy and subsidies will be paid. Besides that, the Bill will bring into the Act precise terms that denote the concepts relating to the production, consumption, and supply of renewable energy.

The Bill on Amendments to the Traffic Act and the Police and Border Guard Act (429 SE), initiated by the Government, passed the second reading. It will establish clearer rules for the use of personal light electric vehicles and prohibit the stopping of motor vehicles on the pavement.

According to the Bill, electric scooters will have to be parked parallel to the pavement edge and, where possible, no further than 20 centimetres from the edge. An at least 1.5-metre-wide pavement section will have to remain clear for passage for other users. Local governments will have the right to restrict the speed limit for electric scooters where this is necessary, for example near kindergartens and on heavy-traffic streets.

It will also introduce a maximum permitted alcohol limit of 0.5 milligrams of alcohol in the blood or 0.25 milligrams in one litre of breath for personal light electric vehicle drivers, cyclists, and light moped drivers. Until now, upon checking, the police have had to make a subjective assessment of whether or not a person is intoxicated. In order to increase safety, motor vehicles will have to maintain a 1.5-metre lateral distance where the width of the road permits when passing a cyclist or a scooter or a moped driver.

Amendments will also be made in respect of the stopping of motor vehicles on the pavement. In the future, it will be allowed to stop or park on the pavement only where the traffic sign permits it. Up to now, the principle has been that it is allowed to stop a motor vehicle on the pavement to load goods, even in the case where no preconditions have been established therefor in terms of traffic management. The marking of places for loading goods can be organised by the municipality, the possessor of land, a company or, for example, the apartment association.

The maximum fine rates related to the violation of the requirements for stopping and parking will also increase to influence parking offenders. In addition, the Bill will make an amendment to terminate the database of the automated traffic supervision system and to transfer its data to the police database POLIS.

During the second reading, it was decided to include a national derogation to the Bill, according to which, under certain conditions, holders of a category B driving licence will also have the right to drive category A1 vehicles.

Three Bills passed the first reading

The Bill on Amendments to the Income Tax Act (443 SE), initiated by the Government, passed the first reading in the Riigikogu. It will amend the principles for the allocation of income tax to local governments. Starting in 2025, the share of the income tax paid to municipalities on pension income will be increased and the share paid on other income will be reduced gradually over three years, so that they will be equal at 10.23 percent by 2027. Currently, municipalities receive 2.5 percent income tax on pension income and 11.89 percent on other income of natural persons.

The Bill aims to reduce regional underdevelopment and urban sprawl. The amendment will accelerate the growth of income tax receipts in municipalities with a high share of elderly people and slow it down in municipalities with a higher share of working-age population and higher salary levels. The total revenue base of local governments remains unchanged under the Bill.

Anti Allas from the Social Democratic Party Group took the floor during the debate.

The Bill on Amendments to the Accounting Act (428 SE), initiated by the Government, passed the first reading. It will standardise and simplify the requirements for the circulation and preparation of machine-processable source documents, in particular e-invoices.

The explanatory memorandum notes that e-invoicing for the public sector has been mandatory in Estonia since 2019, but the wider uptake of e-invoicing in the private sector has stalled. The Bill is intended to remove the obstacles that have emerged with the widespread use of electronic invoices and to facilitate the implementation of a single European standard for e-invoices.

Under the Bill, electronic invoices will have to comply with the European standard and the Estonian standard will be abolished. The Bill will also abolish the obligation to issue only e-invoices to public sector entities in all cases and will provide for the right of accounting entities that have registered as e-invoice recipients in the commercial register to require sellers to issue electronic invoices.

The Bill on Amendments to the Income Tax Act and the Funded Pensions Act (434 SE), initiated by the Government, passed the first reading. It will create opportunities to invest in more financial instruments than before. To this end, the list of financial assets in the investment account will be extended to include covered bonds, regulated crowdfunding instruments, and regulated crypto assets.

The Bill will allow for the deduction of indirect costs, such as the management fee of a securities account, in addition to direct transaction costs, from the income made both through an investment account and from investments outside the account. It will also allow for the offsetting of gains and losses when investing in crowdfunding and crypto-assets outside the investment account. In addition, units in unauthorised small funds, which by their nature should not be included in the list of financial assets, will be excluded from the authorised financial assets of the investment account.

The deliberation of four Bills was cancelled at the sitting due to the absence of the presenters. The first reading of the Bill on Amendments to § 2 of the Public Holidays and Days of National Importance Act (402 SE),  initiated by the Centre Party Group, the Bill on Amendments to the Basic Schools and Upper Secondary Schools Act and the Vocational Educational Institutions Act (404 SE), initiated by the Centre Party Group, the Bill on Amendments to the Family Benefits Act (329 SE), initiated by the Estonian Conservative People’s Party Group, and the Bill on Amendments to the Family Benefits Act (388 SE), initiated by the Centre Party Group, will be deferred from the agenda for Wednesday.

The sitting ended at 5.10 a.m.

Verbatim record of the sitting (in Estonian)

Video recording will be available to watch later on the Riigikogu YouTube channel.

Riigikogu Press Service
Karin Kangro
+372 631 6356, +372 520 0323
[email protected]
Questions: [email protected]

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