Tax-free car allowance in Estonia, 2026
If you drive your own car for work in Estonia, your employer can pay you a car compensation of €0.50 for every work kilometre, up to €550 a month, with no income or social tax. There's one condition: the trips are recorded in a mileage log (sõidupäevik).
Updated:
Work out your month
An employer can pay €0.50 for every documented work kilometre, up to €550 a month, with no income or social tax.
Car compensation rules in short
- €0.50 per kilometre is the highest tax-free rate.
- €550 per calendar month is the cap, reached at 1,100 km.
- The allowance carries no income tax and no social tax.
- Every work trip must be in a mileage log: driver, registration number, odometer readings, date, route and purpose.
- The car is an M1 or M1G passenger car that doesn't belong to the employer.
Examples
| Work km per month | Calculation | Tax-free |
|---|---|---|
| 120 km | 120 × €0.50 | €60.00 |
| 504 km | 504 × €0.50 | €252.00 |
| 1,100 km | 1,100 × €0.50 | €550.00 |
| 1,224 km | 1,224 × €0.50 = €612, cap €550 | €550.00 (€62 is salary) |
If an employer pays more than €550 in a month, the excess is ordinary salary and is taxed. In Excel that happens easily, because a formula like =E14*0.5 knows nothing about the cap.
Examples by job
- Home care nurse: 38 km a day × 20 days = 760 km × €0.50 = €380.00 a month.
- Cleaner: 34 km a day × 20 days = 680 km × €0.50 = €340.00 a month.
- Real estate agent: 61 km a day × 20 days = 1,220 km, which would be €610; the tax-free part is €550.00.
Without a mileage log, it's salary
The mileage log isn't a formality — it's the one thing that makes the allowance tax-free. With no log, or a log missing a required field, the whole amount counts as salary and is taxed like salary.
Who can receive it
Employees, public servants and management board members who use their own car for work trips.
Examples of jobs and situations: who DrivLog is for.