Estonia Moves Swiftly to Close iGaming Tax Gap After Legislative Oversight

Estonia has acted quickly to correct a legislative error that inadvertently exempted online gambling operators from taxation, following the discovery of a drafting mistake in recent amendments to the country’s Gambling Tax Act.

In December, the Riigikogu (Parliament) approved changes to the Gambling Tax Act introduced by Eesti 200 MP Tanel Tein. However, an oversight in the wording of the amendments resulted in remote gaming activities being excluded from the updated legislation. As a consequence, online gambling providers were unintentionally left out of the 5.5% tax rate scheduled to apply in 2026.

The error created a potentially significant shortfall for the state budget, with an estimated €4m in gambling tax revenue—earmarked for social initiatives, sports, and cultural programmes—put at risk.

With the revised Gambling Tax Act having come into force on 1 January, lawmakers and regulators moved rapidly to address the issue. The Riigikogu voted on corrective amendments on 11 February, setting 1 March as the effective date for implementation.

Importantly for operators, the correction will not be applied retroactively. The government has confirmed it will not seek to recover taxes for January and February, allowing gambling providers to avoid backdated liabilities during the period in which the legislative gap existed.

Prime Minister Kristen Michal had previously called for a swift resolution, emphasising the importance of maintaining funding streams for cultural and sporting bodies. Speaking to ERR earlier in January, he said: “My position is that culture and sports should not go without funding because of this. If needed, we will look at other priorities and adjust our activities. If need be, we’ll do some things more sparingly, but culture and sports shouldn’t suffer because of this.”

Finance Minister Jürgen Ligi was more direct in his criticism of the situation, describing the legislative blunder as one of the most serious missteps of the current parliamentary term. “I accept political compromises as such, but this is the most unpleasant compromise I’ve encountered during this Riigikogu term, and easily the worst one of this government’s term…If there was one [mistake], it certainly wasn’t made by the finance minister,” he said.

Following the brief period of uncertainty, Estonia’s gambling sector can now look ahead with greater clarity. The December bill not only addressed tax structures but also set in motion a phased reduction of gambling tax rates, decreasing them by 0.5% annually until 2028. By that point, the rate will stand at 4%, positioning Estonia among the lowest-tax jurisdictions for gambling in Europe.

At 4%, Estonia’s gambling tax would sit 1% below Malta’s 5% rate. Malta has long been recognised as one of Europe’s leading iGaming hubs, and Estonia appears intent on following a similar trajectory as it seeks to capitalise on the economic benefits generated by the gaming industry.

By fLEXI tEAM