Driving Logbook Estonia: Company Car Tax Checklist

Car expenses look simple until payroll, VAT and fringe-benefit rules meet in one month. A founder pays an employee for using a personal car, a board member drives a company car home, or a company wants to claim that a passenger car is used only for business. In each case the same practical question appears: what evidence will the accountant need before the month is closed?

In my work with Estonian companies, the weak point is rarely the car itself. The weak point is the missing route record, late approval or unclear split between a personal car and an employer car. This guide explains when a driving logbook is mandatory, what the logbook should contain, and how to keep the control useful instead of turning it into paperwork for its own sake. The official starting point is emta on the documents required for personal car compensation from EMTA.

Start with the right car regime

Before asking for a logbook, decide which tax situation you are in. A personal car compensation case is not the same as an employer-owned company car case. The documents, tax risk and accounting treatment are different.

The personal car route applies when an employee, board member or other eligible person uses their own passenger car for work duties and the company reimburses business kilometres. The employer-car route applies when the company owns or leases the car and must prove how the asset is used.

Personal car compensation needs a real logbook

EMTA's guidance on the documents required for compensation says the employer needs a written decision, order or directive showing the person receiving compensation, the amount, and the date or period covered. A copy of a document proving the right to use the car should also be kept.

For tax-free compensation, the key evidence is the driving logbook. It should show the person using the car, the vehicle registration number, odometer readings at the start and end of each business trip, the date and the purpose of each trip. Paper or electronic format is fine if those fields are complete.

• Approve the compensation basis before payment, not after the year-end review.
• Keep one line per business trip, not one vague monthly total.
• Use a business purpose that another person can understand later.
• Do not pay compensation for future trips before the trips have happened.

The 2026 practical limit is also clear in emta on tax-free personal car compensation limits: tax-free compensation can be paid up to EUR 0.50 per kilometre, but not more than EUR 550 for trips made in one calendar month.

A company car logbook has a different job

For an employer passenger car, the logbook is not a way to reimburse private trips tax-free. EMTA's employer-car guidance explains that private trips cannot be compensated based on a logbook. The logbook can still be useful when the company wants to prove that the car is used only for business and work trips.

That distinction matters. If the company can prove business-only use, the fringe benefit does not arise. If private use is allowed or cannot be ruled out, the month needs a separate fringe-benefit and TSD check rather than a cosmetic logbook.

Month-end checks before payroll and VAT close

The right time to check the logbook is before payroll and VAT are closed. If the accountant receives the car file after TSD or VAT reporting, the company may need corrections even when the business use itself was legitimate.

I recommend a short monthly control instead of a large year-end clean-up. The owner or operations person should confirm the car regime, compensation period, missing routes, and any private-use signal before the accountant books the month.

1. Separate personal-car compensation from employer-car use.
2. Check that each reimbursed trip has a date, purpose, route logic and odometer reading.
3. Check the EUR 0.50/km and EUR 550 monthly cap before payment.
4. Flag employer-car private use before TSD is filed.
5. Keep the decision, logbook and payment evidence in the monthly accounting archive.

This is a small control, but it prevents a common owner-level problem: paying a clean-looking reimbursement that the accountant cannot defend later.

A driving logbook is not a magic tax document. It works when the company first chooses the correct car regime, records real business trips, respects the monthly limit and closes the evidence before payroll and VAT reporting. See also: tax optimization for startups in Estonia.

If your company reimburses car use or needs a cleaner month-end routine, compare your process with our accounting services in Estonia or contact Accounting Resources before the next payroll run.