Estonia Approves Phased Reduction of Online Gambling Tax to Attract International Operators

Parliamentary Approval for Tax Cut

Estonia's parliament, the Riigikogu, has officially approved a phased reduction of the online gambling tax. The decision, passed with a 51–31 vote, will see the tax rate on remote gambling decrease from the current 6% to 4% over the next two years. This move is intended to modernize the nation's gaming framework and position Estonia as a more attractive hub for international online gambling operators.

The legislation, spearheaded by MP Tanel Tein of the Eesti 200 parliamentary group and a member of the Finance Committee, aims to boost tax revenue by expanding the overall tax base through increased operator presence. Tein stated, 'We want to bring global accounting to Estonia,' emphasizing the focus on attracting foreign tax revenue rather than relying on physical casinos.

Strategic Goals and Phased Implementation

The primary objective behind this tax reduction is to enhance Estonia's competitiveness within the European iGaming market. Proponents argue that a lower tax rate will encourage more international online casino operators to register and base their operations in Estonia, thereby increasing transparency and ultimately generating more tax income.

The reduction will be implemented gradually, with the tax rate decreasing by 0.5 percentage points annually, aiming to reach the 4% target by 2028 or 2029. This policy marks a significant reversal from earlier discussions and even a 2024 tax reform that had seen the remote gambling tax increase from 5% to 6%, with previous plans to raise it further to 7% by 2026.

Concerns and Criticisms

Despite the parliamentary approval, the tax cut faced considerable debate and criticism. Concerns were raised by several government officials and opposition members regarding the potential negative impact on public funding and regulatory oversight.

• The Ministry of Finance warned that a tax cut of this magnitude could lead to significant shortfalls in the state budget if revenue projections are not met, estimating potential declines of €6 million in 2026, €8 million in 2027, €10 million in 2028, and €13 million in 2029.
• Deputy Secretary General Evelyn Liivamägi highlighted the existing challenges in overseeing remote gambling operators, many of whom have their operations, servers, and executives abroad, stating, 'It's difficult to exercise oversight now, and it will remain difficult going forward.'
• MP Liina Kersna abstained from the vote, citing concerns about the projected impact on cultural funding.
• Opposition figures, including Centre Party MP Andrei Korobeinik, questioned the effectiveness of such a small tax cut in attracting operators, arguing that stability and predictability are more crucial factors.

Impact on Culture and Sports Funding

To address concerns about cultural and sports funding, the updated legislation includes provisions for a 'concrete funding model.' This model aims to support initiatives such as the construction of a new arena, a campaign promise of MP Tanel Tein. Additionally, two new endowments will be established under the Cultural Endowment of Estonia: one to attract private capital and another specifically dedicated to sports facilities.

The government's broader reforms in 2025 also introduced a dual-licensing system, more stringent anti-money laundering measures, mandatory audits, and real-time data reporting, aiming to create a robust and transparent regulatory environment. These efforts are part of a larger strategy to modernize gambling rules that have been largely unchanged for over 15 years, strengthening supervision and improving the reliability of the sector.