05.09.2025
Nearly 60% of Estonians feel that the rise in VAT since the beginning of July has already affected their ability to save and invest, according to a Norstat survey commissioned by LHV.
The survey showed that 59% of people in Estonia have seen their saving and investment capacity fall as a result of the VAT increase. Feeling the most pressure on their wallets are 18–29-year-olds, with as many as 69% of them saying that the tax increase has had a significant impact on their plans to save and grow their money. VAT increased by two percentage points to 24% from 1 July.
Nelli Janson, the Head of the Investor Community at LHV, stated that the VAT hike has intensified the ongoing period of rapid price increases, challenging people’s ability to bear the pain. ‘The purchasing power of the Estonian population is in decline, which further complicates saving. Young people who have just entered the labour market are particularly vulnerable, as their incomes are generally not very high,’ said Janson. She added that people aged 30–39 are also feeling a big impact on the decline in saving and investment capacity. ‘This is the typical period for starting a family. For households with young children, the current period is certainly very difficult, as expenses are high and pressure on the monthly budget is particularly strong,’ Janson said.
Yet saving and investing is key to increasing future security. Therefore, Janson recommended continuing with even small amounts in more difficult periods. ‘This is especially true for young people, who have time on their side. The sooner they start, the longer the money has to work for the person. Small sums of money saved at a young age can, with consistency and a habit of saving, grow into a decent amount over the years,’ she stressed. Janson also pointed out that once you slip off the sledge, it is often difficult to get back on track. ‘Then it is worth reminding yourself that investing is the only way to grow your money in the long run and protect it from inflation,’ Janson said.
According to Vahur Vallistu, Chairman of the Management Board of LHV Asset Management, one of the most effective investment products is the second pension pillar, which is also the main source of future security for many people in Estonia. ‘It is certainly worth considering the possibility of transferring 4% or 6% of your gross salary to the second pillar instead of 2%. Such a decision may not have a very noticeable impact on the wallet, but it could mean tens of thousands of euros of extra income for retirement, which could be used to enjoy a dignified old age,’ said Vallistu. He added that the state pension in Estonia is less than 40% of the average salary, but to maintain the standard of living we are used to, we could plan for a retirement of 70–80%. This requires a financial buffer, which each individual would have to build up.
The survey was carried out in mid-August by the research firm Norstat, which polled 1,000 Estonians aged 18–74.
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