Estonia pushes ahead with 4% iGaming tax rate

Estonia is doubling down on its strategy to become a major European iGaming hub, pressing forward with a significant overhaul of its gambling framework and a phased reduction of its remote gaming tax. The move marks one of the most ambitious fiscal plays in the EU at a time when most jurisdictions are tightening controls and increasing rates.

The Riigikogu has approved plans to gradually reduce Estonia’s remote gambling tax from 6 per cent to 4 per cent of gross gaming revenue, beginning in 2027. The rate will fall incrementally over several years, confirming the government’s intention to transform Estonia into a competitive base for operators seeking cost-efficient European headquarters.

The reform, backed by coalition MPs from the Reform Party and Eesti 200, aims to consolidate Estonia’s position as a digitally advanced jurisdiction with an accessible regulatory structure. Once fully implemented, the 4 per cent rate will be one of the lowest in the European Union, placing Estonia firmly in the orbit of established hubs like Malta and Gibraltar.

Lawmakers argue that a lighter tax burden will draw operators away from higher-tax countries such as France and Spain, redirecting corporate profits, innovation activity, and high-skilled employment into the Estonian economy.

Building a hub for tech, compliance and talent

Supporters of the reform see it as a second-stage evolution of Estonia’s regulatory model. Since opening its online gambling market in 2010, the country has licensed around 30 operators. Officials now want Estonia to shift from “early mover” to regional centre, encouraging companies to expand local tech, compliance, and customer service teams.

Part of the appeal lies in Estonia’s digital-first reputation. The government wants to leverage the country’s e-governance ecosystem, streamlined licensing processes, and strong cybersecurity credentials to create a stable, innovation-friendly environment for gambling firms.

To counter criticism that the tax cut risks public revenue, the government has linked the initiative to broader national objectives.

A portion of future gambling income will flow into a national sports infrastructure fund, a long-standing priority for the Estonian Olympic Committee. Another mechanism blends gambling-derived donations with state and private sponsorships to support major cultural and sporting projects.

Additionally, above an annual threshold of around €27 million, part of the gambling tax will continue to support the Estonian Cultural Endowment, maintaining an important funding stream for cultural and community initiatives.

Supporters argue that if the reforms succeed in attracting additional licensed activity, both sports and cultural sectors may ultimately benefit from a larger overall revenue pool—even at a lower tax rate.

Not everyone is convinced. The Ministry of Finance has warned that the tax cut may not fully “pay for itself”, estimating a potential €13 million reduction in tax receipts by 2029 compared with maintaining the existing 6 per cent line.

The opposition Centre Party has also criticised the government’s economic modelling, pointing to the absence of independent analysis showing that operators will relocate to Estonia in the needed volumes. Some MPs question whether public projects should be tied to revenue from an industry with inherent volatility and a significant social footprint.

There are also concerns about supervision. As more operators adopt globalised structures – where headquarters, risk teams and tech infrastructure sit outside the licensing state- regulators must manage higher enforcement burdens. Deputy Secretary-General Evelyn Liivamägi has warned that any increased reliance on gambling revenue must be matched with “realistic expectations about oversight capacity”.

A decade after opening the market, Estonia is betting big again

Despite the uncertainties, the direction of travel is clear: Estonia wants a place at the top table of Europe’s iGaming jurisdictions.

With distant competitors raising taxes, and established hubs like Malta facing renewed external competition, Estonia is seizing a moment to differentiate itself through fiscal competitiveness, digital governance, and tightened regulatory standards.

The amended Gambling Act will undergo final procedural steps before implementation guidelines are published in 2026, ahead of the first scheduled tax reduction in 2027.