Value Added Tax (VAT) in Estonia

(Updated in November, 2020)

The VAT is paid into the State budget by every taxpayer, who is registered (or who has to be registered according to Value Added Tax Act) in the value added tax register and who performs taxable transactions, which inland are applied with the tax.

Taxable transactions

1) VAT imposable transactions are such inland transactions, performed within the framework of economic activities, as:

• sale of goods;
• provision of services within Estonia;
• Intra-Community acquisition of goods;
• provision of services that are taxable in Estonia and supplied by a foreign taxable  person.

2) Any import of goods is imposed with VAT.

3) The purchase of a new vehicle within the territory of the European Union, performed by the non-registered taxable person or person who is not the taxpayer, is a taxable transaction.

Starting from 1. January 2015 VAT on telecommunications, broadcasting and electronically supplied services shall be taxed in the location of the recipient of the services. The tax percentage shall be the rate that is established in the Member State.

Regarding exceptions please contact Gencs Valters Law firm.

Taxpayers

The taxpayer is a person, including a legal person in public law or a state, rural municipality or city authority, who is engaged in business and is registered or required to register as a taxable person. A taxable person of a foreign state or another Member State is a person, including a pool of assets or association of persons without the status of legal person, treated as a person liable to value added tax according to the legislation of the state in question. Taxpayers are classified:

• Domestic tax payers;
• Taxpayers of other Member States;
• A third country or third territory taxpayers;

A foreign taxable person is not deemed to be an Estonian taxable person simply through being permanently established and engaged in business in Estonia: the foreign person must participate in a transaction or act subject to taxation through its permanent establishment located in Estonia.

For detailed information, please contact Gencs Valters Law firm.

Tax rates in Estonia

• The standard rate 20 %;
• The reduced tax rate of 9 %;
• Tax rate of  0 %.

The reduced tax rate applies to: books and workbooks used as learning materials, both on a physical medium and electronically; medicinal products, contraceptive preparations, sanitary and toiletry products, and medical equipment or Medical Devices intended for the personal use of disabled persons within the meaning of the Social Welfare Act and the grant of the use of such medical devices to disabled persons; press publications, both on a physical medium and electronically, excluding publications mainly containing advertisements or personal announcements, or publications the content of which is mainly erotic or pornographic or video or music content; accommodation services or accommodation services with breakfast, excluding any goods or services accompanying such services.

Tax rate of 0 % applies to: exported goods, Intra-Community supply of goods, sea-going vessels navigating in international waters, aircraft used by an air carrier operating mostly on international routes and equipment, spare parts, fuel and other supplies used on such aircraft, goods transferred and transported to another Member State to a diplomatic representative, a consular agent, a representative or a representation of a special mission or an international organisation recognised by Ministry of Foreign Affairs, institutions of the EU and NATO, goods placed into free zones or free warehouses, or certain goods listed in Annex V of Council Directive 2006/112/EC that are placed into a VAT warehouse, gold transferred to Eesti Pank, services where the place of supply is not Estonia, supplies of goods under diplomatic and consular arrangements etc.

Exemptions are provided for transactions involving securities and financial services (with an option to tax domestically), insurance transactions, postal, health, social and insurance services, as well as services for the protection of children and young persons; the supply, letting and leasing of immovable property, lotteries and gambling, certain education services and transportation of sick, injured or disabled persons.

VAT Register

Registration is required of any person whose taxable supply (excluding import) exceeds 16 000 EUR  in a calendar year. 

For a foreign person engaged in business in Estonia, the registration obligation arises as of the first date on which the taxable supply occurs. A foreign trader must register for VAT in the following circumstances:

• When a trader, with no permanent establishment in Estonia and liable to taxation in another country, makes a taxable supply in Estonia that is not taxed by the Estonian taxable person.
• When a trader, liable to VAT in another Member State, makes a distance sale to a person in Estonia who is not registered for VAT purposes (excluding goods subject to excise duties), and the taxable supply of the distance sale exceeds 35 000 EUR as calculated from the beginning of the calendar year.
• When a trader, liable to VAT in another Member State, makes a distance sale of goods subject to excise duties to a natural person in Estonia for personal purposes.

When a trader, liable to VAT in another Member State, makes distance sale to an Estonian (excluding goods subject to excise duties), the trader can register for VAT voluntarily. A person liable for VAT in another country without a permanent establishment in Estonia may appoint a tax agent approved by the Tax and Customs Board. The Tax and Customs Board within 3 working days after receipt of the registration request shall decide on the taxpayer registration in the Value added tax register or make the decision to refuse registration.

Taxation periods

The taxable period is one calendar month. On the basis of a reasoned request made by a taxable person, the head of the tax authority may establish a taxable period longer than one calendar month. Then the taxable period begins on the first day of the calendar month or first taxable period and ends on the last day of one of the following calendar months.

Tax declarations

Filing and payment is made on a monthly basis by the 20th day of the following month. VAT declarations shall be submitted electronically.

The Financial Minister has determined the form of the VAT declarations and filling instructions. The following data shall be submitted on VAT declaration:

• Acts and transactions subject to tax at a rate of 20 %, including self-supply of goods or services taxable at 20 %;
• Acts and transactions subject to tax at a rate of 9 %, including self-supply of goods or services taxable at 9 %;
• Acts and transactions subject to tax at a rate of 0%, including exportation of goods and Intra-Community supply of goods and services provided to a taxable person of another Member State/ taxable person with limited liability;
• Value added tax payable upon the import of the goods;
• VAT paid or payable on acquisition of fixed assets;
• Intra-Community acquisitions of goods and services received from a taxable person of another Member State;
• Acquisition of other goods and services subject to VAT;
• Acquisition of immovables and metal waste taxable by special arrangements for imposition of value added tax on immovables and metal waste;
• Supply exempt from tax;
• Supply of goods taxable by special arrangements for imposition of value added tax on immovables and metal waste and taxable value of goods to be installed or assembled in another Member State.

Taxation treaties

Taxation treaties ratified by over 50 countries are in force in the Republic of Estonia.