Estonia Moves Forward with Online Gambling Tax Cut

Estonia Moves Forward with Online Gambling Tax Cut

Estonia's parliament has approved a gradual reduction in the tax applied to online gambling, setting the country on a path toward a 4 percent rate over the next two years. The decision, supported by a majority in the Riigikogu, reflects an effort to reposition Estonia within the broader digital gambling landscape while opening a debate about long-term funding for cultural and social initiatives that rely on this revenue stream.

The amendment passed with 51 votes in favour, 31 against, one abstention, and a handful of members not participating. The initiative originates from the Eesti 200 party and has been carried by MP Tanel Tein, who currently serves on the Riigikogu Finance Committee. Tein framed the proposal as part of a broader shift toward drawing international remote-gambling operators into Estonia's regulatory environment rather than relying solely on domestic taxation. His position is that Estonia needs to sharpen its competitive edge if it aims to attract operators that manage their accounting abroad, and that the state stands to benefit from becoming a destination for their fiscal operations.

Tein also linked the reform to a long-standing campaign commitment focused on developing a large arena project. He stated that the legislation establishes a tangible framework for future financing and opens the way to support sports facilities and cultural initiatives under the revised tax framework. According to Tein, the updated model includes two additional endowments under the Cultural Endowment of Estonia, one targeting private capital mobilisation and another aimed at sports infrastructure.

The parliament's approval, however, does not reflect full consensus. Members of the Reform Party expressed differing opinions throughout the debates. Some had previously pushed for a delay or full withdrawal of the proposal, arguing that the tax cut risked reducing contributions to public programmes. In the end, several who had criticised the measure voted in favour, though one, Liina Kersna, abstained. Kersna noted that while she supported the larger objectives behind modernising gambling regulation, she could not disregard the forecasted decline in cultural funding, citing official estimates of a significant reduction in funds allocated to cultural institutions over the next several years.

The Ministry of Finance remained the most vocal critic. Ministry officials warned that the tax reduction could put pressure on the state budget if the anticipated registration of new operators does not materialize at the projected scale. Their calculations indicated that gambling tax receipts could fall by several million euros annually from 2026 through 2029. This scenario, they argued, would tighten the resources available to cultural, educational, and social programmes that rely on these funds.

A particular concern highlighted by the ministry involved regulatory oversight. Deputy Secretary General Evelyn Liivamägi noted that the state already encounters challenges in monitoring remote-gambling businesses whose servers, executives, and customer bases are located abroad. She indicated that lowering the tax rate may make Estonia a more appealing hub for registrations, but without additional resources for supervision, oversight complexities may persist. Her comments underscored that attracting more operators does not automatically translate into more enforceable regulation.

Tein countered criticisms by questioning the accuracy of some revenue projections. He argued that comparisons with analyses from the Foresight Center show that neither culture nor sport would see a reduction in funding in the upcoming year, and that the tax reform could eventually stabilise revenue flows by encouraging formal registrations from international operators who otherwise base their activities in jurisdictions with less transparent oversight.

The debate brought forward two contrasting visions of fiscal strategy. One view emphasises caution, arguing that the state should rely on more predictable revenue streams and avoid reforms that may introduce funding volatility. The other view sees an opportunity to recalibrate the tax rate to better reflect global competition among jurisdictions that host remote-gambling companies. For supporters of the amendment, lowering the tax could draw operators who currently pay taxes elsewhere, ultimately broadening Estonia's taxable base even though the nominal rate is reduced.