VAT Increase encourages consumers to bring major purchases forward – there is a high demand in electronics and cars.

“We are seeing the same pattern repeat as before the previous VAT increase. People tend to make major purchases ahead of the change – especially when it comes to electronics and other high-cost items. While the average shopping basket in our sector is down about 5% compared to last year, we are seeing a 10–20% increase in sales in certain product categories ahead of the VAT change. Feedback from customers indicates a strong preference to make purchases before the tax hike,” said Andrei Fjodorov, Head of Customer Solutions and Quality at Euronics.

According to Fjodorov, there is a noticeable increase in purchases of higher-end smart devices, such as computers and phones, as well as other household electronics like washing machines and refrigerators. Additionally, many customers are opting to replace old appliances with more energy-efficient models. “Take refrigerators as an example – a 10 to 15-year-old model can consume over 50% more electricity, which in the long run significantly increases household costs,” Fjodorov explained.

The car market, under pressure from the car tax, is showing a slight recovery before the VAT increase.

The automotive sector is also seeing a slow but steady revival, though market dynamics have shifted. “Since the implementation of the car tax, car loan and leasing applications are still being submitted, but understandably in smaller volumes than at the end of last year. Consumers are taking more time to consider their purchases. Compared to the same period last year, 38% fewer cars have been registered so far this year, and loan applications have decreased by nearly 30%. Those planning to buy a car this year and who value even a 2% saving are likely to make their purchase before the VAT increase,” said Andrus Salusoo, Head of Inbank’s Estonian Business Unit.

According to Raido Rosenfeld, CEO of Elke Mustakivi and Mustamäe Toyota dealerships, the currently declining car market is likely to experience a more active period just before the VAT hike. “For vehicles purchased through leasing, the monthly payments calculated from July 1 onwards will already reflect the 24% VAT rate. However, buying the car outright before that date could mean a saving of several hundred euros. The average price of a new car today is approximately €35,000. The VAT increase alone will raise the price of the same car by around €573,” Rosenfeld explained.

Rosenfeld also noted that 5,551 new passenger cars have been registered in Estonia since the start of 2025. Compared to the same period in 2024, when 10,106 cars were sold, that’s 4,555 fewer vehicles. However, there are signs of recovery, while the market decline was as high as 66.5% at the beginning of the year, by May the drop had narrowed to 28.1%.

Consumers increasingly prefer to spread out expenses

Despite the possibility of saving hundreds of euros on certain purchases, consumers are more informed than ever. According to Euronics’ Head of Customer Relations, recent trends show that purchasing decisions are increasingly based on necessity. “Customers have become more price-sensitive, and the average shopping basket is more carefully considered than before - people are no longer buying on impulse, but rather based on real need. Most likely, purchases that were already planned are simply being moved forward,” he noted.

Purchase statistics also show that more and more consumers prefer to spread out their expenses. “Installment plans are no longer used only out of necessity - they are a deliberate choice to manage costs and maintain liquidity,” said Fjodorov. Rosenfeld has noticed the same trend in the automotive sector, where customers increasingly spread large expenses, such as car servicing, over six-month periods.

Andrus Salusoo also confirmed the rise in deferred payment solutions. “In addition to distributing costs, smart payment options effectively allow consumers to postpone the tax increase. For example, by using a ‘Buy Now, Pay Later’ solution, a customer can make a purchase before the VAT hike and pay for it interest-free the following month, spreading the cost and potentially saving hundreds of euros. That said, this does not mean consumers should make impulsive purchases. Rather, it offers a way to make necessary large purchases ahead of the increase without exceeding their budgets - especially in a market where prices are likely to rise further,” he concluded.