VAT Rates in Estonia in 2023
Estonia is one of the most reliable and thriving destinations for making investments in the European Union. Businesses that have established in Estonia may access the EU’s enormous marketplace of more than 450 million people. In addition to that, with the help of Estonia’s
e-residency initiative, non-residents can launch and manage an enterprise virtually from any location in the globe.
However, if you are registering a firm in Estonia, you must enroll with the tax authorities in order to pay the various taxes that may apply in the nation. The value-added tax (VAT) in Estonia is one such levy that requires registration. In the event that your yearly revenue is greater than €40,000, you must enroll in VAT. VAT registration in Estonia has to be done with the Estonian Tax and Customs Board.
This article will cover the VAT rates in Estonia. Also, it will cover Estonian VAT registration, the VAT number, and the deadline for filing VAT returns.
What is value-added tax in Estonia?
Value-added tax or VAT in Estonia is a consumption tax levied on the acquisition of products and services. Value-added tax (VAT) is a charge levied by the government that is payable by those who have enrolled to be VAT taxable, depending on whether the need occurs or deliberately. The EU VAT Directive’s implementation into legislation, the Value-Added Tax Act, laid the groundwork for the structure of VAT in Estonia.
The Estonian Tax and customs board is in charge of overseeing the regime of VAT rates in Estonia. The VAT Act specifies that VAT rates in Estonia are 20%, 9%, 5% as well as 0%. Some products, as well as services, are also not subject to VAT rates in Estonia when they are supplied.
VAT rates in Estonia
The VAT rates in Estonia are mentioned below:
| VAT Rates in Estonia | Products & Service |
|---|---|
| 20% (General Rate) | It covers the majority of products and services |
| 9% | It applies to goods like texts and educational materials, pharmaceuticals, etc. |
| 5% | It applies to goods such as news publications, whether printed on paper or published digitally |
| 0% | The provision of services and products of a social aspect, such as universal postal service, healthcare, insurance activities, etc., are exempt from Estonian VAT rates. |
Compliances for VAT registration in Estonia
VAT registration in Estonia necessarily has to be done if the taxable revenue of a resident firm in the country or a permanent establishment of a non-resident firm in the nation surpasses 40,000 euros.
A business is recognized as being subject to a VAT registration in Estonia as having restricted responsibility if their intra-community purchase of products totals more than €10,000 as determined from the commencement of the year.
For non-established enterprises, the VAT Act doesn’t outline any limit for VAT registration in Estonia.
The non-established enterprises are likewise excluded from VAT registration in Estonia if the firm engages in tax-exempted goods or engages in excluded intra-community operations.
What transactions are subject to Estonian VAT Rates?
Estonian VAT Rates are applied to the transactions of the commodities given below:
- Supplies of products and services that are subject to taxation and whose source of supply is Estonia.
- Imports of products from outside the European Union, with the exception of those that are tax-exempt.
- A taxable individual making an intra-community purchase of products from a different member nation of the European Union.
VAT registration number in Estonia
Following VAT registration in Estonia, a VAT Identity number is issued. A VAT registration number, commonly referred to as a KMKR number, is a special identifying number given to companies that are enrolled for VAT. A VAT number is given to a firm upon completion of VAT enrollment.
Each EU member county’s VAT number follows a standard structure. Estonian VAT registration numbers are made up of the national code “EE” and nine numbers. After a company has obtained its VAT number, it is allowed to start trading and collecting Estonian VAT rates. It should abide by the Estonian VAT compliance regulations and submit timely reports.
Documents Required to register and obtain an Estonian VAT number
The following paperwork will be required by the Estonian tax department:
- VAT certificate to demonstrate that the company has been authorized for VAT in another EU country.
- Articles of association
- Confirmation that the firm will provide taxable services in Estonia.
- Copy of the agreement with the fiscal representative, if required.
- An excerpt from the national commerce registry of the business.
Submitting VAT returns in Estonia
You must file VAT returns on a periodic schedule if you have a VAT registration in Estonia. A calendar month constitutes the taxation period. The time frame for filing a VAT return and reporting on intra-community supplies is the twentieth day of the month after the taxable term. While using the e-services platform e-MTA, submitting VAT returns and reports on intra-community supply serves as a suitable option.
The following people are required to submit a VAT return in Estonia:
- Individuals who have enrolled to contribute VAT.
- Those who have presented a receipt or another sales record for a transaction that includes a VAT payment but who are not enrolled as VAT users.
- Taxpayers with limited responsibility are required to submit a VAT return.
- The VAT group’s representative is accountable for filing the group’s VAT return.
VAT Compliance in Estonia
Upon completion of VAT registration in Estonia, you must start adhering to local laws in a number of different sectors.
This comprises:
- Generating bills that include the information disclosed in accordance with the Estonian VAT Act.
- Digital invoices that are signed appropriately by the recipient, confirming their identification and consent.
- Keeping up thorough records of company accounts and dealings such as bills, and financial statements, that need to be preserved for a minimum period of seven years.
- Invoicing consumers properly for commodities and services in conformity with Estonian VAT legislation applicable at the time of provision.
Conclusion
Most products and services sold inside Estonia are subject to VAT, which is a consumption tax. The basic VAT rate in Estonia is 20%, with lowered rates of 9%, 5%, and 0% applied to specific commodities and services. It is crucial for firms to register for VAT in Estonia if their annual sales surpass the specified limit, in order to be in compliance with the legislation.
You can speak with our professionals at Odint Consulting if you want to register for value-added tax in Estonia. Our experts will assist you in the process of VAT registration in Estonia.
FAQ’s
The normal Estonian VAT rate is 20%.
In Estonia, companies must enroll in VAT if their yearly sales surpass €40,000.
A VAT registration number is a unique identification number assigned to businesses that have registered for VAT. The country code “EE” and nine numbers make up the Estonian VAT registration number.
The twentieth day of the month after the taxable term is the deadline for submitting a VAT return and reporting on intra-community supplies. The taxation term is one calendar month.
In Estonia, obtaining a VAT registration number after filing an application often takes a maximum of thirty days. The processing could, however, occasionally take longer, particularly if there happen to be problems or application-related delays.
CEIDG is a business book of entries with info on self-employed entrepreneurs. Any sole trader must register in CEIDG.
