Value Added Tax – VAT, levied on goods and services sold in the course of business activity, imports of goods from non-EU countries, and purchases of goods from countries of the EU. Value added tax is paid by the final consumer.
Registration as a VAT payer
If the taxable annual turnover of a company exceeds 40,000 EUR within the territory of Estonia, it must be registered with the Tax and Customs Board as a VAT payer. If the turnover is below this limit, registration is not required.
VAT liabilities
The VAT payer undertakes:
- To add VAT to the price of the sale of goods or the provision of services in Estonia.
- To keep records of value added tax.
- To calculate and pay the VAT amount.
- To store documents related to transactions and issue invoices as required.
It is possible to deduct from taxable supply the input value added tax paid upon the purchase of a goods or service used for business.
VAT rates
The general VAT rate is 22% of the taxable value of goods or services.
A tax rate of 9% applies to certain goods and services including accommodation services, medicine, books, periodicals, health and hygiene products (determined by the Ministry of Social Affairs), and medical equipment for the disabled.
The 0% VAT rate applies to a range of goods, including exported goods, and consulting services provided to VAT payers in another EU Member State, as well as for ships and aircraft used in international traffic. The 0% VAT rate is also applied to services provided outside Estonia, as well as to a number of services related to water and air transport and the carriage of goods. The postage, insurance, and health care i.e. social services are tax exempt. A complete list of VAT exemptions can be found in the VAT Law.
Declaration and payment of VAT
The period for VAT taxation is a calendar month. You can file a value added tax return and pay VAT to the Tax and Customs Board by the 20th of the month following the taxation period. The declaration can be submitted electronically at the e-Tax and Customs Board (e-MTA), if you have been a VAT payer for at least 12 months, or by contacting the regional tax center of the Tax and Customs Board.
VAT for a sole proprietor (FIE)
An individual entrepreneur is obliged to pay VAT as a registered VAT payer if the business turnover exceeds 40,000 EUR per year. The VAT rates for the FIE are the same as for commercial associations.
VAT refund to a taxpayer in a foreign country
A VAT refund to a taxpayer in another EU Member State is carried out on the same grounds as a VAT refund in Estonia.
Claims for reimbursement must be submitted electronically through the tax authority of the country where the entrepreneur is located, which, in turn, sends an application to the Estonian tax authority.
VAT paid by a taxpayer of another Member State in Estonia when importing or purchasing goods or receiving services used for the purpose of doing business in the country of location of this person shall be refunded to the taxpayer of another Member State on the basis of an application by the taxpayer and in accordance with the procedure established by a regulation of the person responsible for this area minister if:
- In the country where the taxable person is located, the taxable person has the right to deduct the provisional value added tax paid on the import or purchase of goods or the receipt of services under the same conditions from the calculated value added tax.
- In accordance with this Law, Estonian taxpayers have the right to deduct the provisional value added tax paid on the import or purchase of goods or the receipt of services under the same conditions from their calculated value added tax.
- The amount of value added tax to be refunded is at least 50 EUR per calendar year, or at least 400 EUR if the application is submitted for a period shorter than a calendar year but covering at least three months.
Not allowed to refund:
- VAT related to the activities which are tax exempt without the right of deduction.
- VAT expenses that are limited in the member state of reimbursement.