In a concerning trend, Estonia’s tax arrears for individuals and companies rose by €17.8 million in the fourth quarter of 2024. This increase starkly contrasts with a more modest rise of €6.8 million during the same period in 2023, highlighting a troubling escalation in unpaid taxes.
As of January 1, 2025, the Estonian Tax and Customs Board (ETCB) reported a significant total of 28,900 individuals whose tax debts have either accrued or increased over the past year. This figure reflects an increase of 1,154 debtors compared to the start of last year, indicating a growing challenge for the tax collection agency.
Notably, tax arrears among individuals surged by nearly €3.7 million in the last quarter of 2024, with income tax debts being the primary contributor. According to Liina Jõõts, Head of the Revenue Department at ETCB, it’s worth mentioning that over 50% of these substantial new tax liabilities are being settled in instalments. The number of individuals facing tax arrears jumped by 1,304 in the preceding quarter alone. “This time last year, we saw an increase of 951 individuals with tax debts,” Jõõts explained.
The rise in debtors during the fourth quarter of 2024 can largely be attributed to payment deadlines for land tax and income tax that fell in October. Fortunately, 86.8% of the claims due in October were paid promptly.
On the corporate side, the percentage of legal entities meeting their tax obligations on time was 87.14% in the fourth quarter of 2024, slightly down from 87.75% a year earlier. This decline resulted in a minor increase in the number of corporations facing tax arrears—up by 158 entities. The total tax arrears for businesses rose significantly, with a €14 million increase primarily driven by VAT and specific income tax liabilities.
Jõõts highlighted that a critical factor in the rising tax debts is the increasing number of arrears associated with future due dates indicated by assessment notices. Amounting to €1.4 million at the beginning of last year, this figure skyrocketed to €7.4 million by January 1, 2025.
Read about Tax Rates for Small Businesses in Estonia 2025
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