Tallinn GMT +2
Ernst & Young Baltic AS Rävala 4
10143 Tallinn Estonia
Indirect tax contacts
Tõnis Elling
Ranno Tingas
A. At a glance
Name of the tax
+372 (6) 114-610 tonis.elling@ee.ey.com
+372 (6) 114-610 ranno.tingas@ee.ey.com
Value-added tax (VAT)
Local name Käibemaks (KM)
Date introduced 1 January 1991
Trading bloc membership European Union (EU)
Administered by Ministry of Finance (http://www.fin.ee)
VAT rates
Standard
Estonian Tax and Customs Board (http://www.emta.ee)
22% (until 30 June 2024), 24% (with effect from 1 July 2025 according to a draft law)
Reduced 9%, 13% (with effect from 1 January 2025)
Other Zero-rated (0%) and exempt
VAT number format
EE123456789
VAT return periods Monthly
Thresholds
Registration
Established
Non-established
Distance selling
Intra-Community acquisitions
Electronically supplied services
EUR40,000
None
EUR10,000
None
EUR10,000
Recovery of VAT by non-established businesses Yes, subject to certain conditions
B. Scope of the tax
VAT applies to the following transactions:
• Supply of goods or services made in Estonia by a taxable person.
• Supply of services with a place of supply not in Estonia (that is, services are provided through a seat or fixed establishment located in Estonia to a person who is registered as a taxable person
or taxable person with limited liability in the EU or who is a person from a non-EU country engaged in business).
• Reverse-charge services received by a taxable person in Estonia (that is, services for which the recipient is liable to pay the VAT).
• The intra-Community acquisitions of goods from another European Union (EU) Member State by a taxable person (see the EU chapter).
• The importation of goods into Estonia (except for VAT exempt imports), regardless of the status of the importer.
Quick Fixes. Pending introduction of a “definitive” system for the VAT treatment of intra-Community supplies of goods to taxable persons, the EU has adopted Quick Fixes for intra-Community trade in goods. For an overview of Quick Fixes rules, see the EU chapter. For documentary requirements, see Section H. Invoicing, subsection Proof of exports and intra-Community supplies.
As of 1 January 2020, VAT Quick Fixes were implemented into the Estonian law regarding the Council Directive (EU) 2018/1910. There are no variances from the EU law into the local Estonian law.
Effective use and enjoyment. To avoid instances of non-taxation or double taxation, EU Member States can apply use and enjoyment rules that allow a service that is “used and enjoyed” in the EU to be taxed or prevent a service that is “used and enjoyed” outside the EU from being taxed. If a service is taxed in the EU under the use and enjoyment provisions, a non-EU supplier of the service may be required to register for VAT in every Member State where it has customers that are not taxable persons. For information regarding the rules relating to VAT registration, see the chapters on the respective EU countries.
In Estonia, only telecommunications, broadcasting and electronic services are subject to the “used and enjoyed” provisions.
Transfer of a going concern. In Estonia, a transfer of a going concern (TOGC) is not a taxable transaction, where the transfer of an enterprise or a part thereof falls within the meaning of the Law of Obligations Act and the interpretation of various legal cases. However, this means that there is no clear guidance from the tax authorities on the TOGC rules and as such, each transfer is determined on a case-by-case basis.
Transactions between related parties. In Estonia, there are no specific rules for the value for VAT purposes for transactions between related parties.
C. Who is liable
A taxable person is an individual or a business entity (including a public entity and municipality) that makes taxable supplies of goods or services in the course of a business in Estonia. This rule also applies to a branch or fixed establishment of a foreign business entity.
The VAT registration threshold is annual supplies in excess of EUR40,000, counted from the beginning of a calendar year. A non-established business without a fixed establishment in Estonia that makes a taxable supply must register for VAT in Estonia if the place of supply is Estonia and if the supply is not taxed by the Estonian taxable person (purchaser). The registration obligation arises from the time of the supply, regardless of the threshold of EUR40,000. A business that is liable to register for VAT in Estonia must notify the VAT authorities of its VAT registration liability within three days.
Exemption from registration. The VAT registration obligation does not arise if all the taxable supplies of the person are zero-rated supplies, except unless it is an intra-Community supply of goods and the supply of services of which the place of supply is not in Estonia and the services
Local VAT registration. A nonresident supplier may choose to register for VAT in each Member State and account for VAT on all supplies made and recover input tax in accordance with local rules (see the Non-established businesses subsection above). Non-EU businesses may be required to appoint a fiscal representative for accounting for the VAT due on these transactions.
In Estonia, upon registration, it is required to attend the procedure in person, i.e., the person seeking registration cannot email or send the registration form by post or fax. However, it is possible to use either an authorized person or a tax representative for the procedure.
To register as a VAT-liable person, an application for registration (Form KR), an application for registration as a nonresident taxpayer (Form R2), power of attorney and trade register extract of the company are submitted to the Estonian Tax and Customs Board by email (to kmkr@emta.ee). Forms KR and R2 must be signed by an authorized person, i.e., the person on the trade register extract or authorized person in which case the document based on which the authorization has been granted is needed. Power of attorney grants the right to file/receive VAT registration documentation and conclude agreement to use the e-tax reporting portal on behalf of the company. Power of attorney must be certified by notary and apostille or legalized.
The fiscal representative of a nonresident is a person to whom a corresponding activity license has been issued by the tax authority and whom a nonresident may authorize to represent them for the performance of the obligations arising in Estonia.
All the rights and obligations of a nonresident extend also to the fiscal representative. The fiscal representative is required to ensure that the nonresident’s monetary and non-monetary obligations arising from tax legislation are performed within the set term and in full.
The appointment of a fiscal representative does not change the obligations of the nonresident, as they are still liable for fulfilling their tax obligations in Estonia.
A nonresident of a third country engaged in business with no permanent establishment in Estonia must appoint, upon registration as a taxable person, a fiscal representative, who has been approved by the tax authority. In addition, the nonresident must also notify the tax authority of the fact by ending a copy of a contract concluded with the chosen fiscal representative by email (to emta@ emta.ee).
The tax authority shall register a person as a taxable person by entering the data concerning the person in the register of taxable persons as on the date on which the registration obligation arose, within five working days as of the receipt of the application. Upon registration, the tax authority shall issue one VAT identification number for all purposes and for all taxable persons. The structure of the number is always EE and 9 digits (e.g., EE012345678).
One-Stop Shop. A supplier can choose to account for the VAT due under the EU One-Stop Shop (OSS), which can be used for intra-EU cross-border supplies of goods and all cross-border supplies of services made to final consumers in the EU.
The OSS is an electronic portal that allows businesses to:
• Register for VAT electronically in a single Member State for all intra-EU distance sales of goods and for B2C supplies of services.
• Declare and pay VAT due on all supplies of goods and services in a single electronic quarterly return.
The OSS can be used by businesses established in the EU and outside the EU. If a supplier or a deemed supplier decides to register for the OSS, it must declare and pay VAT for all supplies (goods as well as services) that fall under the OSS.
An Estonian legal person (taxable person) can submit the application for registration online in the e-services environment of the online portal (e-MTA) by choosing “Registers and inquiries,”
goods themselves. This means that the single supply from the “underlying” supplier to the final consumer is split into two deemed supplies:
• A supply from the supplier to the facilitator (deemed B2B supply).
• A supply from the facilitator to the final customer (deemed B2C supply). Any intermediation service provided by the facilitator is disregarded for VAT purposes.
This provision does not cover all sales facilitated via the facilitator. It only covers distance sales of goods imported from non-EU jurisdictions in consignments with an intrinsic value not exceeding EUR150. The jurisdiction of residence of the supplier using the facilitator is irrelevant. The supply to the facilitating platform is VAT exempt and the supplies made by that platform follow the e-commerce VAT rules as described above. In addition, the provision also covers sales within the EU, if the supplier is not established within the EU. This applies to both local shipments within one Member State as well as intra-Community shipments. In both cases, the final customer must be a nontaxable person.
In Estonia, if the intrinsic value of the goods, imported from a third country and resold to the end user whose place of residence is in the EU, exceeds EUR150 or if the actual seller of the goods is a person located in the EU – in such case the e-shop is not responsible for the taxation of the goods with VAT.
The obligation to register in Estonia for VAT liability (and also the right to get back from the tax authority the amount of VAT paid upon the import of goods) shall arise for a third-country business whose company has a registered office in a third country and who has no permanent establishment in the EU if:
• It transfers through the e-shop, owned by any other business, to the end user its goods that are located in Estonia, and this e-shop, according to new rules, is treated as the purchaser and reseller of the goods (although the transfer of the goods to e-shop is the supply taxable at 0% VAT rate in such case).
• It owns the e-shop itself, sells as deemed supplier through its e-shop to the end user the goods located in Estonia of the other third-country business and has not registered for the OSS special scheme.
For more details about the rules for online marketplaces, see the EU chapter.
Vouchers. The VAT Act in Estonia differentiates a single-purpose voucher (SPV) and a multipurpose voucher (MPV). The voucher is an SPV if the voucher-related place of supply of the goods or services and the amount of VAT due are known at the time of the issue of the voucher. A VAT obligation on the transfer of an SPV arises on the date when the full or partial payment for the voucher has been received. The voucher is an MPV if, at the time of the issue, the place of supply of the transferred goods or provision of service or the collectible VAT is not known. For an MPV, the VAT obligation arises on the date when the goods have been handed over or services have been provided.
Registration procedures. Taxable persons must submit an application for registration (Form KR) to the Tax and Customs Board at a service bureau of the Tax and Customs Board, online via the self-service environment e-Tax Board or by email. The application can be submitted in PDF format by email (to kmkr@emta.ee), completed in Estonian, digitally signed, and submitted by a legal representative (who has to identify themselves) or an authorized person (authorization required) or a notary or via e-maksuamet/e-toll (e-Tax Board/e-Customs). To submit the application for registration as a person liable to VAT in the e-Tax/e-Customs, the user has to have the power (authorization) “KMKR avalduste esitamine” (submission of VAT applications) given by a legal representative of a taxable person.
Non-established businesses must register in person, i.e., the person seeking registration cannot email or send the registration form by post, fax or through the e-Tax/e-Customs. However, an
authorized person may act for the taxable person. The authorization must be digitally signed or proved by notary and apostilled (apostille is not needed for specific countries).
The tax authority shall register a person as a taxable person within five working days as of the receipt of the application or additional documentary (if required).
Deregistration. A taxable person that ceases to be eligible for VAT registration must deregister. That is, it must notify the VAT authorities that it must cease to be registered. A taxable person may also request deregistration if its taxable turnover drops below the annual registration threshold. However, deregistration is not compulsory in these circumstances. Tax authorities can remove a taxable person, that is not performing business activities, from the VAT register.
Changes to VAT registration details. The Estonian Company Registration Portal is an environment that allows companies to amend registry data. The portal allows electronic submitting of changing the company name and address. The Company Registration Portal entry is automatically sent to the Tax and Customs Board.
The Company Registration Portal can be used for notifying the registrar about changes in the primary field of activities by only self-employed persons and general and limited partnerships who are not required to submit annual reports to the registrar. Business associations can submit their field of activities and changes thereof only with their annual reports.
Non-established businesses must submit application for nonresident taxable person on changes in register entries concerning the termination of activities, liquidation of the permanent establishment and changes in other information (Form R4) by post, fax or through the e-Tax/e-Customs. However, an authorized person may act for the taxable person.
D. Rates
The term “taxable supplies” refers to supplies of goods and services that are liable to a rate of VAT, including the zero rate.
The VAT rates are:
• Standard rate: 22% (until 30 June 2024), 24% (with effect from 1 July 2025 according to a draft law)
• Reduced rates: 9%, 13% (with effect from 1 January 2025)
• Zero-rate: 0%
The standard rate of VAT applies to all supplies of goods or services, unless a specific measure provides for a reduced rate, the zero rate or an exemption.
At the time of preparing this chapter, according to the draft act on amendments to the VAT Act, effective 1 July 2025, the standard rate of VAT in Estonia will increase to 24% instead of the current 22%. This is part of the defense tax, the purpose of which is to collect additional state budget tax revenue for the development of Estonia’s defense capability and security investments. Until 30 June 2025, a taxable person has the right to continue applying the 20% VAT rate on turnover from contracts concluded before 1 May 2023, provided that the contract stipulates the use of the 20% VAT rate and does not allow for the possibility of revising this rate when the tax rate changes. A taxable person implementing special arrangements for cash accounting for VAT has the right to declare and pay VAT at the rate of 20% if turnover occurs in 2024 for goods sent or made available or services provided in 2023, for which an invoice with a VAT rate of 20% has been submitted in 2023, but the payment is received in 2024.
At the time of preparing this chapter, the draft act on the matter has currently not been approved by the parliament (passed first reading 1 October 2024 and is due for the second reading).
Continuous supplies of services. If the provision of services continues for longer than a period of taxation, the services are deemed to have been provided and received during the taxable period in which the provision of the services terminates. In the case of the provision of regular services to the same purchaser, the time at which the services are provided and received is deemed to be the taxable period overlapping with the end of the period of time for which an invoice is submitted or during which payment for services received is to be made as agreed, but not later than after 12 calendar months. Upon the regular provision of service, in the case of which a tax liability arises for the recipient of the service, within a longer period of time than one year, the supply of the service shall be deemed to have been rendered as of the commencement of the provision of the service on 31 December of each calendar year if the services have not been paid for and the provision of the services has not been completed within the period.
Goods sent on approval for sale or return. There are no special time of supply rules in Estonia for the supply of goods sent on approval for sale or return. As such, the general time of supply rules apply (as outlined above).
Reverse-charge services. The time of supply for supplies of reverse-charge services is the earliest of the following events:
• When the Estonian buyer receives the service.
• When the Estonian buyer makes a payment.
Leased assets. In the case of operational leases, the time of supply rule for services applies (as outlined above). In the case of capital leases, the time of supply rule for goods rules applies (as outlined above).
Imported goods. The time of supply for imports is when the goods clear customs.
Intra-Community acquisitions. The intra-Community acquisition of goods takes place on the 15th day of the month following the month in which the goods are dispatched or made available or on the date on which an invoice is issued for the goods if the invoice is issued prior to the 15th day of the month following the month in which the goods are dispatched or made available to the purchaser. This is different in the case of a transaction that was originally not treated as intraCommunity turnover, but then the grounds for a transaction cease to exist and the transaction shall be deemed to constitute an intra-Community supply of goods. In such cases, the intra-Community acquisition of goods shall be deemed to have been affected on the date on which those grounds ceased to exist.
Intra-Community supplies of goods. An intra-Community supply takes place on the 15th day of the month following the month in which the goods obtained via an intra-Community acquisition and are dispatched or made available or on the date on which an invoice is issued for the goods if the invoice is issued prior to the 15th day of the month following the month in which the goods are dispatched or made available to the purchaser. This is different in the case of a transaction that was originally not treated as intra-Community turnover, but then the grounds for a transaction cease to exist and the transaction shall be deemed to constitute an intra-Community supply of goods. Then intra-Community supply of goods shall be deemed to have been created on the date on which the grounds ceased to exist.
Distance sales. There are no special time of supply rules in Estonia for supplies of distance sales. As such, the general time of supply rules apply (as outlined above).
Call-off stock. As of 1 January 2020, a call-off-stock definition will be implemented into the Estonian law regarding the Council Directive (EU) 2018/1910. Under the new definition, call-off stocks are considered as goods that are delivered to a stock in another Member State for the purpose of transferring the goods to another Member State’s taxable person. The transport of call-off stock to another Member State is no longer deemed an intra-Community supply if the
person must recalculate its entitlement to input tax paid on acquisition of the immovable property and for related goods and services. A taxable person may opt to charge VAT on the sale or leasing of immovable property (the option may not be applied to the sale or lease of living space). If the transfer is subject to tax, no capital goods adjustment is required.
In Estonia, the capital goods adjustment also applies to immaterial fixed assets, for example, software development expenses.
Refunds. If the amount of input tax that is deductible for a VAT period exceeds the amount of output tax that is chargeable in the same period, the taxable person has a VAT credit. The taxable person may choose to use the VAT credit to offset other tax obligations or penalties, or it may request a refund. Refunds are made within 60 days after the due date for payment. However, this period may be extended for up to 120 days if the tax authorities have just reasons to check the circumstances of the VAT refund application further.
Pre-registration costs. If a taxable person has, prior to the person’s date of registration as a taxable person, acquired goods, except for fixed assets, intended for transfer or for the manufacture of goods to be transferred, the taxable person shall have the right to deduct the input tax on such goods in the taxable period during which the goods were transferred as taxable supply.
A taxable person that has received services prior to the person’s date of registration as a taxable person shall have the right to deduct the input tax on such services in the taxable period during which such services were provided as taxable supply.
The input tax on fixed assets acquired before registration of a person as a taxable person may be deducted if the person has not used the fixed assets prior to the registration.
Bad debts. Effective 1 January 2022, output tax accounted for on supplies that do not get paid by the recipient (i.e., a bad debt) can be recovered in Estonia. The supplier can claim relief from VAT on bad debts incurred, provided that all the following conditions are met:
• The VAT invoice, which is wholly or partially unpaid, has been issued by the taxable person for the goods supplied or services provided.
• The VAT amount calculated on this supply has been declared in the respective monthly VAT return.
• The debt claim has not been alienated.
• At least 12 months (this will not be applicable if the claim exceeds EUR30,000, when there must be also a court settlement that has entered into force), but not more than three years, has elapsed from the due date of payment of that VAT invoice.
• The claim has been written off in the accounting of the taxable person, as it was unable to collect that claim, regardless of its efforts to make the utmost for collecting that claim, or the costs for recovering that claim will exceed the estimated income to be accrued.
• If the claim exceeds EUR30,000, then such claim must be proved with the court settlement that has entered into force.
• The recipient of the goods supplied, or services provided, is not a related person in the meaning of the Income Tax Act.
• At the month of write-off of the claim, the taxable person has informed in writing the recipient of the goods or services about the write-off of the claim in its accounting and has specified therein the VAT amount related to the written-off claim.
Noneconomic activities. Input tax incurred on purchases that are used for noneconomic activities is not recoverable in Estonia. If in the accounts of the taxable person it is not possible to separate input tax paid on goods or services used for business-related purposes from input tax paid on goods or services used for noneconomic activities, i.e., purposes not business related, the taxable person must request that the tax authority determines the amount deductible.
An intra-Community supply of goods must be evidenced by documents confirming the transfer of the goods and the transport of the goods to another Member State. A taxable person must declare and submit a report on its intra-Community Sales Listing for the zero-rate to be applicable (see the subsection below Supplementary filings). It is also required that the VAT registration number of the acquirer in the other Member State is indicated. See the subsection on Quick Fixes above.
No special documentation applies in Estonia for evidencing the application of the Quick Fixes. Normal intra-Community documentation rules apply.
Foreign currency invoices. If an invoice is issued in a foreign currency, the amount of VAT must be converted to the domestic currency, which is the euro (EUR), using the official exchange rate quoted by the European Central Bank (ECB) on the date of the transaction.
Supplies to nontaxable persons. It is not required to issue an invoice to nontaxable persons if the transfer of goods or provision of services is for personal use, except in the case of distance selling, the transfer of a new means of transport or treating goods transferred to third-country nontaxable persons as exports.
Distance selling. For intra-Community distance sales made B2C, a full VAT invoice must be issued. However, if the supplier operates the OSS regime, then no full VAT invoice is required unless requested.
Records. In Estonia, examples of records that must be held for VAT purposes include copies of invoices issued by or on behalf of that taxable person and invoices for goods acquired or services received by or on behalf of the person, in a chronological order and in the original form. An accounting source document is a certificate that content and format shall, if necessary, allow a competent and independent party demonstrating the circumstances and veracity of the occurrence of a business transaction. Invoices are an example of an accounting source document.
In Estonia, VAT books and records can be kept outside of the country. The place and manner at which invoices are preserved may be chosen by the taxable person on the condition that the invoices or information could be made immediately available at the request of the tax authority. Records can be kept in or outside of Estonia. There is no repatriation period set in Estonian taxation regulations, thus the taxable person should be able by any time provide by request of tax authority, provide all required accounting source documents, invoices.
Record retention period. The retention period of records is at least seven years as of 1 January of the year following the preparation or receipt of the document or, in the case of files or dossiers, the making of the last entry therein. Customs declarations certifying the import of goods shall be preserved for seven years as of the beginning of the calendar year, following customs formalities. The record retention period is 10 years from 31 December of the year of transaction for the person implementing special arrangements on an electronic communications service and electronically supplied service.
Electronic archiving. Electronic archiving is allowed in Estonia. Estonian tax authorities maintain the electronic storage of the VAT declarations.
I. Returns and payment
Periodic returns. Estonian taxable persons must file VAT returns monthly. Returns must be filed by the 20th day of the month following the end of the tax period.
Invoices must be disclosed in the VAT return appendix in the following cases, which must be fulfilled simultaneously:
• Invoices on which the transferor of the goods or provider of services has marked the supply taxable at the standard rate and 9% VAT rates.
• Invoices with a total amount (without VAT) that makes up at least EUR1,000 for one transaction partner during the taxation period. The transaction partner-based threshold shall be calculated separately for purchase and sale invoices.
Periodic payments. Payment of VAT in full is required on the same date as the VAT return submission deadline, i.e., the 20th day of the month following the end of the tax period. All VAT liabilities must be paid in euros. VAT can be paid to tax authorities by bank transfer, by bank link or credit card using the tax authority’s electronic self-service environment “E-Tax Board” or in person by card payment terminals or cash in service bureaus and customs offices. “Bank link” is an e-commerce payment method in the Baltic States that allows the consumer to log on to their internet bank account and confirm a prefilled payment. A bank link can be used in E-Tax Board by the customers of SEB Bank, Swedbank, Luminor Bank, LHV Pank and Coop Pank.
Electronic filing. Electronic filing is allowed in Estonia, but not mandatory. VAT returns can be submitted electronically using the tax authority’s electronic self-service environment “E-Tax Board.” Electronic filing becomes obligatory for persons who have been VAT liable for at least 12 months. A taxable person can continue submitting paper forms after the tax authority approves a formal application.
However, digital reporting is the preferred method for filing VAT returns in Estonia. The Estonian Tax and Customs Board has developed the electronic tax filing system called e-Tax portal for taxable persons to submit tax declarations by inserting and uploading data to e-Tax portal.
Payments on account. Payments on account are not required in Estonia.
Special schemes. Travel agents. VAT applies to the margin between the total amount paid by the customer and the total cost (inclusive of VAT) of travel agent’s acquired goods and received services.
Secondhand goods, original works of art, collectors’ items and antiques. VAT applies on the difference between the sales and purchase price of the goods that has been reduced by the VAT contained therein. The special scheme is applicable only if the goods are purchased for the purposes of resale. The option is available to calculate the taxable amount to be declared for the resale of the secondhand goods during the whole taxable period on the basis of the difference between the selling price and the purchase price of the secondhand goods that are subject to the special arrangement. Therefore, the taxable person applying the special arrangement is not required to determine the taxable amount separately for each item. Instead, the taxable amount may be determined on the basis of all the sales and purchase transactions during the entire taxable period. Such a calculation of the taxable amount is justified in cases where normal accounting is too complex. The consent of the tax authority is required to use this basis.
Immovables, scrap metal, precious metal and metal products. A transferor may transfer the goods exclusive of VAT to an acquirer that calculates and pays the amount of VAT under the domestic reverse charge.
Cash accounting. All taxable persons of which the annual turnover does not exceed EUR200,000 can opt for cash-basis VAT accounting instead of accrual-basis accounting. The right to deduct input tax arises at the time when the tax becomes chargeable. Therefore, according to which a taxable person has the right to deduct input tax on the purchase of goods or services from a taxable person applying the special arrangement for cash accounting for VAT in accordance with the payment for the goods or services, in the extent of the amount of input tax calculated on the amount paid.
Annual returns. Annual returns are not required in Estonia.
Supplementary filings. Intrastat. A taxable person that trades with other EU countries must complete statistical reports, known as Intrastat, if the value of either its sales or purchases of goods
submitted or that contained information on the basis of which the tax amount was calculated incorrectly. The time limit for taxable persons to voluntarily correct errors in previous VAT returns is also usually three years.