Therefore, a fine imposed on a company is not an expense that can be deducted from business income and therefore entails the obligation to pay income tax. However, many are surprised to learn that the company is obliged to pay income tax even if the driver pays the fine themselves and the company incurs no expenses related to the fine. At least for the present, the tax authority has formed such an opinion and is basing their practice thereon.

Estonia in fact has a so-called ‘expense tax’ so it is logical that if the company incurs no expenses (the company does not pay the fine – the manager does), there should be no obligation to pay income tax. The tax authority's opinion is the opposite. If the car is registered under the company name and the fine is issued to the company, then the company is obliged to pay income tax regardless of who pays the fine itself.

Of course, problems arise if the company's director is not aware that a fine has been issued in regard to the company's car and has been paid by the driver. The driver pays the fine and the director does not find out about it. This may lead to the company being unaware of its obligation to pay income tax.