Personal car compensation in Estonia 2026 — a guide for employers and accountants

For employers, HR managers and accountants: how to pay compensation for an employee's personal car tax-free, what has to be on file, and what to declare. Current as of 2026.

When an employee or a board member drives their own car on work business, the employer may reimburse them tax-free. The exemption is not automatic: it rests on a written order, a mileage log (sõidupäevik) kept by the employee, and correct reporting. This page covers the employer's side; the driver's side — what goes into the log and how to keep it — is in the sõidupäevik guide.

Rate and cap in 2026

Parameter	Value
Tax-free rate	up to €0.50 per kilometre
Monthly cap per employer	€550 per calendar month
Mileage that corresponds to	1,100 business km per month
In force until 31.12.2024	€0.30/km and €335 per month

Three things that trip employers up in practice:

€0.50 is a ceiling, not a mandatory tariff. You may set a lower rate in the order — €0.30/km, say — and the payment stays tax-free. The €550 cap does not move with the rate.
The cap applies per employer. Someone working for two employers may receive up to €550 a month from each; what another employer pays is not yours to track.
The cap is monthly. Kilometres above 1,100 in one month do not roll over into the next.

The rate covers all ordinary running costs of the car — fuel, insurance, servicing, depreciation — so none of them can be claimed on top. The one exception is parking while performing work duties: that may be reimbursed against receipts and outside the €550 cap.

What the employer must have on file

1. A written decision or order (käskkiri)

The basis for a tax-free payment is the employer's written decision (käskkiri, korraldus) stating:

the recipient — first name and surname;
the amount — the rate per kilometre or the sum;
the date or period whose trips are being compensated.

It may cover a period longer than one calendar month — a whole year, for instance — so it need not be re-issued monthly. A new order is needed when the rate, the vehicle or the recipient changes.

2. The employee's mileage log

Without a record of the trips, no payment can be tax-free. The log must contain:

the first name and surname of the person using the car;
the make and registration plate of the vehicle;
the date, destination and purpose of every business trip;
the odometer reading at the start and at the end of every business trip.

No form is prescribed: paper, an Excel sheet and a PDF from an app are equally valid as long as those items are there. A free starting point for the employee: mileage log template 2026 (Excel).

3. Proof of the right to use the car

A copy of the document proving the right to use the car is attached to the decision: the registration certificate if the employee owns the car, or the certificate plus a power of attorney from the owner if it belongs to someone else (a spouse, a relative, a leasing company). A car the employee does not own can still be compensated — what matters is that it does not belong to the employer and is not in the employer's possession. Otherwise it is a company car (tööandja sõiduauto), under an entirely different set of rules.

Paying: monthly or as a lump sum

You do not have to pay every month. One payment may cover several months as long as each month counted separately stays within €550.

Example. An employee drives 600 business km in January, 800 in February and 700 in March. Month by month that is €300 + €400 + €350 = €1,050, and the employer may pay it all in April — no breach, because no month counted exceeded €550. A breach arises only when the calculated amount for an individual month goes above the cap.

Parking during work trips is reimbursed separately, against receipts.

Above the cap, or without a log

Two situations make the payment taxable, and both are expensive.

The part above the cap is a fringe benefit (erisoodustus). The employer pays the tax: income tax on the price of the benefit at the 22/78 coefficient, and social tax at 33 % on the benefit plus that income tax, declared on annex 4 of form TSD by the 10th day of the following month.

Example. An employee drives 1,400 business km in a month and the employer pays €0.50/km, i.e. €700. €550 stays tax-free; the remaining €150 is a fringe benefit:

Calculation	Amount
Price of the fringe benefit	€150.00
Income tax 150 × 22/78	€42.31
Social tax (150 + 42.31) × 33 %	€63.46
Total tax	€105.77

The €700 payment therefore costs the employer €805.77. The 300 "surplus" kilometres cannot be carried into the next month, because the calculation is tied to the calendar month.

Compensation paid without a log is salary. With no mileage log behind it, the payment is remuneration rather than tax-free compensation: it is declared per person on annex 1 of form TSD (annex 2 for a non-resident) and taxed in full — income tax, social tax, unemployment insurance and mandatory funded pension. A missing log does not make the payment merely riskier; it turns the whole amount into an expensive payroll line.

Reporting: form INF 14

Compensation for the use of personal cars paid during a calendar year is declared by the employer on form INF 14, filed with the Estonian Tax and Customs Board (EMTA) once a year, by 1 February for the previous calendar year.

Part I is the personal-car compensation itself: the recipient's name and personal identification code, the car's registration plate and the amount paid. Parts II and III cover training costs and health-promotion costs — the same form, the same deadline.
Part I is filed by resident legal persons, state and local-government institutions, employers who are natural persons, and non-residents with a permanent establishment in Estonia.
The fringe benefit is declared separately — on annex 4 of form TSD, monthly. INF 14 does not replace it.

That leaves EMTA with three sets of data that have to agree: the INF 14 rows, the payroll and the mileage log. An audit looks precisely at that — whether the amount paid matches the kilometres in the log, and whether the log is continuous rather than patchy.

Board members

For the purposes of this rule a board member (juhatuse liige) is treated as an employee: the same written order, mileage log, €0.50/km rate and €550 monthly cap apply, even where there is no employment contract. Payments to a board member also go into Part I of form INF 14.

How Odoma Tracker helps the employer

Odoma Tracker is an app on the employee's phone; the employer installs nothing and buys no in-car device. What changes on the accountant's desk:

Trips record themselves. The app detects a trip automatically — no "start recording" button to remember.
Business and personal are separated. Trips are classified against a working schedule, and any single trip can be re-tagged.
The month's figure is available as you go: business kilometres, the compensation in euros, and how much is left before the €550 cap — so an overrun does not surface for the first time in payroll.
A PDF mileage log with every mandatory field, e-mailed to the accountant straight from the app.
Several employees? The Odoma dashboard. Every driver's log arrives automatically, you approve the trips, the compensation per employee is calculated under the rate and the cap, and the accountant gets the export — see Odoma for business.

That leaves two things on the employer's side that no app will do for you: the order and INF 14.

FAQ

Is a mileage log enough on its own to pay the compensation? No. The log evidences the kilometres, but the basis for the exemption is the employer's written decision (käskkiri or korraldus) naming the recipient, the amount and the date or period, with a copy of the document proving the right to use the car attached. Without the order you have only kilometres; without the log, only paper — a tax-free payment needs both.

Can an employer pay less than €0.50 per kilometre? Yes. €0.50/km is the tax-free ceiling, not a compulsory tariff, and the employer may fix a lower rate in the order. The €550 monthly cap applies whichever rate you choose.

An employee drove 1,400 km in a month. What happens to the kilometres above the cap? The tax-free maximum for a calendar month is €550, which at €0.50/km corresponds to 1,100 kilometres. The rest may still be paid, but it is a fringe benefit: on €150 that means €42.31 of income tax and €63.46 of social tax. The kilometres cannot be moved into another month, because the calculation is monthly.

When is form INF 14 due? Once a year, by 1 February, for the previous calendar year. The fringe benefit is reported independently of it — on annex 4 of form TSD, by the 10th day of the month following the payment.

Can compensation be paid to a board member, or for a car the employee does not own? Yes to both. A board member is treated as an employee here: a written order, a mileage log, up to €0.50/km and no more than €550 per calendar month, with no employment contract required. A car belonging to someone else works too, provided the right to use it is documented — the registration certificate or a power of attorney from the owner — and the car does not belong to the employer.

Sources

Legal disclaimer

This document is prepared by Odoma Digipädevuse Selts (registry code 80659718) for general user information. It is not legal, accounting, or tax advice. Estonian tax regulation can change; for disputes or material questions, contact:

Maksu- ja Tolliamet (EMTA) — the official regulator. Site: emta.ee, business-client helpline.
A licensed accountant — for individual recommendations on your situation (wording of the order, contested payments, cross-border cases).

Odoma Digipädevuse Selts assumes no responsibility for decisions made on the basis of this text.

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