New Motor Insurance Act as of 1.10.2014

The Ministry of Finance hereby reminds all those interested that as of tomorrow a new Motor Insurance Act will enter into force. The Act places motor insurance into the contemporary legal system, elaborates on and amends a number of requirements and definitions, and, all in all, renders it more convenient for the customer to obtain the relevant insurance.

The new law transforms the motor insurance contract into a regular insurance contract. The contract can be concluded with a term of no more than one year and, for the contractual period, a policy certifying the applicability of insurance will be issued. When required, a contract that is automatically extended can be concluded.

The most significant amendment pertains to the injured party’s right to claim compensation for motor insurance damage from their insurer, providing the customer with the opportunity to arrange the relevant matters through their usual service channels.
This principle will take effect on January 1, 2015. So as to receive compensation, the customer will have a choice of whether to approach their own insurer or the insurer of the person that caused the damage. Damage will be compensated by the insurer whom the customer approached. Insurers will clear their accounts amongst themselves later.
Old motor insurance contracts will be binding until expiry of the insurance period noted on the policy and such old contracts need not be amended once the new Act takes effect. Claims that arose prior to the new Act taking effect will be processed pursuant to the old Act. 
The new Act will increase the sums insured: the property insurance related limit of 1 million will be increased to 1.2 million euros, and the limit related to bodily injury or damage caused to someone’s health will be increased from the current 5 million to 5.6 million euros. 
Attention is continually paid to uninsured vehicles. Vehicles entered in the traffic register may remain uninsured for no more than 12 months, given that the vehicle will not be used in traffic.
Vehicles that remain uninsured for a longer period of time are subject to the Estonian Traffic Insurance Foundation’s automatic insurance cover instead of the Foundation’s heightened insurance premium system. This will lessen the percentage of uninsured vehicles in traffic and helps collect means to compensate damage caused by uninsured vehicles. 
For such vehicles, the owner will have to pay the Estonian Traffic Insurance Foundation insurance premiums and should an accident occur, excess will be imposed.
More information about the new Act is available in Estonian at
Source: Estonian Ministry of Finance

ID check for lottery approved by government

The Cabinet approved a bill which would make it mandatory to show identification when buying lottery tickets.

The bill, which need approval by the government and President, will come into effect in a little over a year and would help those who have self-imposed limits on playing the lottery. The voluntary list is currently only in effect in casinos.

The limit will also extend to sports betting, but not to “scratch and win” cards.

Taivo Põrk, of the business and accounting department of the Ministry of Finance, said Estonia does not have many lottery addicts, but the problem is very real.

“The danger is there and we found that personal identification would not take too much time or cause too many problems,” he said, adding that there a numerous cases of people buying hundreds of lottery tickets, or spending thousands of euros in a few month.

Source: ERR News

Cabinet approves loan interest ceiling restriction proposal

The Cabinet has signed off on a draft law that sets a ceiling for the annual percentage rate on consumer loans.

Part of a package of legislation to address tactics from the instant loan subsector – sometimes seen as predatory. The law says that a loan agreement is null and void if the cost of the credit comes to more than three times the six-month average annual interest rate on consumer loans, as posted by the central bank.

As of this August, that triple rate is 102.17 percent.

Agreements would be automatically considered void if the rate is higher, and the consumer pays only the principal back by the original loan payment date.

Source: ERR News

The Estonian Medical Association concerned about foreign practitioners

The Estonian Medical Association is worried that due to a misinterpretation of the Recognition of Foreign Professional Qualifications Act, several foreign doctors have made their way into Estonian hospitals and are practicing without having undergone a proper background check.

The association and several other professional bodies issued an appeal yesterday urging the Social Affairs Ministry to carry out a review of the legality of registration of the doctors.

The association has previously formally sought opinions from the Chancellor of Justice and the Ministry of Social Affairs on whether the Estonian Health Board has followed the rules on qualifications needed for foreign doctors to practice medicine here.

The problem involves the uncontrolled registration of doctors from third countries (outside the EU), which poses many other concerns such as language barriers and unknown medical history.

In accordance with the Chancellor of Justice’s decision in response to an April query from the association that the Health Board has made mistakes in determining vocational qualifications of foreign doctors, the Estonian Medical Association has also proposed that all medical staff hired from outside the European Union must present documentation to prove adequate local language skills.

“We ask the Health Board to present to the Medical Association and professional associations the following details on these doctors: name, doctor code, specialty, registration date, position in Estonia, the name of the institution that conferred specialist qualifications and duration of the training, duration of specialist work experience in the five years prior to registration and the grounds for registration,” the doctors said in their appeal.

Source: ERR News

President proclaims VAT law amendments

Estonian President Toomas Hendrik Ilves promulgated the amendments to the Value-Added Tax Act on May 20, 2014.

The law makes it mandatory for businesses to disclose in an annex to the VAT declaration the other party in all transactions exceeding 1,000 euros.

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Amendments to the law coming into force this year

The Ministry of Finance reminds everybody on the amendments to the legislative acts that enter into force this year.
This year’s budget expenditure will be 8.06 billion euros and the expected revenue will be 8.02 billion euros. The increase in state revenue is five percent, soon to reach all spheres of life. The budget was prepared conservatively, as indicated by the 0.7 percent structural surplus measuring the substantive coping with expenditure.
An amendment to the Taxation Act enters into force, which reduces the limitation period for enforcement of compulsory tax levied pursuant to returns as well as administrative acts (e.g. orders) from seven years to five years. The practice has shown that the percentage of collection of tax debts older than five years is extremely low.
Amendments to the Income Tax Act enter into force, which allow equal taxation of real estate income of contractual investment funds established either in Estonia or in any foreign country. From now on also the Estonian-sourced real estate income of Estonian contractual investment funds will be taxed.  The income taxed at the fund level will no longer be taxed at the level of the unit-holders. These amendments only apply to real estate income and not to pension funds or their unit-holders.
EU 2014-2020 Structural Assistance Act sets out the national allocation of tasks from the Structural Funds, allows the ministries to impose conditions for granting aid, specifications regarding the procedure of granting aid, supervision and settling disputes.
Amendments to the Public Procurement Act allow to nullify procurement contracts unlawfully entered into under the framework contract. The term of submitting the request for review of public procurement has been changed from seven working days to ten calendar days. From now on, the disputes related to state secrets will be submitted to administrative court.
As agreed in the State Budget Strategy in spring 2012, the excise duty on tobacco increases by 6% and on alcohol by 5%.
As of February 1, 2014, a bailiff will have the right under an administrative regulation and at the request of a tax authority to order detention in accordance with the procedure of preliminary detention. 
As of April 1, 2014, the court and prosecution claims as well as the administration of state fees collected by courts will be transferred to the Tax and Customs Board’s Taxable Persons Register database.  This means that the claims of several state authorities will be gathered into a single register providing individuals a better overview of their financial obligations to the state. The court and prosecution claims will have a separate reference number. In cases stipulated by law, the prepayment account of an individual will be used for settling the claim in the extent of the sum calculated.
Amendments to the Value Added Tax Act allow extended options of providing proofs of tax free purchases, the place of taxation of electronic communication services and electronic services will change and quantitative restriction will be set to coffee (500 g) and tea (100 g) sent without VAT from a country outside EU. The amendments will enter into force from March 1, 2014.
Additional exemption rate of pensions increases.  As of January 1, 2014, the additional tax-exempt income of pensions is 2520 euros per year, which is 210 euros per month. This is 18 euros more than before.
Amendments to the Insurance Act and the Investment Funds Act enter into force. These will change the insurers’ management requirements based on EU-wide rules, allow insurers, in addition to being an insurer’s agent, operate as an agent of credit institution, management company or investment firm, raise the insurance amounts of insurance brokers’ liability insurance contracts.
Amendments to the Credit Institutions Act and related acts enter into force. The amendments based on EU legislation set new obligations to banks, investment firms and hedge fund managers. Banks and investment firms will have to maintain more quality capital and create additional risk buffers. Additional requirements are also set for management bodies. Hedge fund managers will be monitored more closely. The act increases financial stability and allows for increased reliability and transparency in financial sector.
The validity period of the limits of pension fund management fee will be extended. The act of amendment of the Investment Fund Act, the Funded Pensions Act and the Social Tax Act extends the validity period of the limits of pension fund management fees of mandatory funded pension (in case of conservative funds 1.2% and the rest 2%) by five years. The act also amends the rules of succession of units of mandatory pension fund. Now, the units can also transfer to legal persons, in addition to natural persons. The regulation of estate bankruptcy has also been amended. If the estate is declared bankrupt the creditors can satisfy their claims out of the units of mandatory pension fund.
The acts of amendment of the Financial Supervision Authority Act and the Investment Funds Act improve the financial supervision over financial conglomerates, facilitate the offering of units of other member states’ investment funds in Estonia, and give the financial supervision authority a more comprehensive role in promoting financial knowledge among the population.
Source: Estonian Ministry of Finance

Parliament considers bill to limit taxi tariffs

The new draft law on public transport is proposing to allow local governments to introduce a maximum limit for taxi fare, writes Äripäev.

The draft that was prepared by the Ministry of Economic Affairs has already gone through first reading in the parliament. The deadline for submitting amendment proposals for the draft bill is September 11.

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