Value-added tax is levied on goods and services sold in the course of business, import of goods from non-EU countries, acquisition of goods from European Union countries, and receiving services from foreign companies. Value-added tax is paid by the end consumer.
Registering as a person liable to value added tax
If the taxable annual turnover of your company exceeds 40,000 euros, you are required to register the company with the Tax and Customs Board as a person liable to VAT. If the turnover is below that limit, registration is not required.
Since 2025, the following is included in 40 000 euro limit:
- taxable supply of goods and services, including 0 per cent taxable supply, except the transfer of fixed assets;
- supply of real estate transactions, except the transfer of fixed assets and occasional transactions;
- supply of insurance services and financial services, except occasional services.
The registration obligation does not arise in case all the taxable supply of the person is tax-free supply and the supply taxable at the 0 per cent value added tax rate, except intra-Community supply of goods.
To register as a person liable to VAT, submit a written application to the Tax and Customs Board either in e-MTA (the e-services environment of the Estonian Tax and Customs Board), a service bureau of the Estonian Tax and Customs Board, or the e-Business Register.
More information is available on the website of the Tax and Customs Board: Registration as a VAT payer.
There is no obligation to register as a person liable to VAT if the entire turnover of the person is taxed at a zero rate and the turnover does not include:
- intra-Community turnover from the goods nor
- services supplied to taxable persons in other Member States where the turnover is deemed to have been incurred in the Member State of the recipient.
An application for registering as a person liable to VAT that has already been submitted cannot be amended. If it is necessary to change the starting date of the registration obligation indicated in the application to an earlier date, a new application must be submitted.
The VAT number is unique and you cannot transfer your VAT liability and VAT number to another person (e.g. to a legal successor). However, if a VAT group is formed, all members of the group will use the VAT number of the representative of the group.
Verification of the EU VAT registration number
From 1 January 2025, a special scheme for small enterprises was introduced, allowing small enterprises from other Member States to use a 40, 000 euro VAT-free treshold in Estonia, if their total supply in the European Union does not exceed 100,000 euros. It also gives Estonian small enterprises the opportunity to use tax exemption until the threshold is reached in other countries where they operate.
More information is available on the website of the Estonian Tax and Customs Board: “Special scheme for small enterprises”.
VAT-related obligations
As a person liable to VAT, you are required to:
- add VAT to the sales price when selling goods or providing a service;
- keep VAT accounts;
- calculate and pay the VAT amount;
- retain documents related to transactions and to present invoices that comply with the requirements.
You may deduct from taxable supply the VAT paid upon acquiring goods or services used for taxable supply (input VAT).
More information on the obligations of taxable persons can be found on the website of the Estonian Tax and Customs Board.
VAT rates
Since 01.07.2025, the standard rate of value added tax is 24%.
Some goods and services (e.g. books, medicines, medical devices for people with disabilities, paper and electronic press publications) have a 9% VAT rate. The exact list can be found in subsection 2 of § 15 of the Value Added Tax Act.
The VAT rate for accommodation services is 13% as of 1 January 2025.
The list of goods and services taxed at the 0% rate of VAT is set out in subsections 3 and 4 of § 15 of the Value Added Tax Act.
The list of goods and services exempt from tax is set out in § 16 of the Value Added Tax Act.
Declaring and paying VAT
The taxation period for VAT is a calendar month. A VAT return and its annex must be submitted to the Estonian Tax and Customs Board and the tax must be paid by the 20th day of the month following the taxation period.
On the basis of a reasoned request by the taxable person, the Tax and Customs Board may also establish a tax period longer than a calendar month, starting on the first day of the calendar month or the first taxation period and ending on the last day of a subsequent calendar month. You can apply for a taxation period longer than a calendar month, regardless of the size of your turnover. In this case, the VAT return must also be submitted by the 20th day of the month following the taxation period.
You can submit the return electronically in the e-MTA e-services environment where data can be entered manually or uploaded from a file in XML or CSV format. VAT returns can also be submitted via data exchange layer X-tee.
If you have been a taxable person for at least 12 months, you must submit your VAT return electronically.
More information is available on the website of the Tax and Customs Board: Filing VAT returns.
VAT return forms on the website of the Tax and Customs Board
VAT for a sole proprietor
As a sole proprietor, you must pay VAT if you are registered as a person liable to VAT. Similarly to companies, you will be obliged to register when your turnover exceeds 40,000 euros a year.
The VAT rates are the same for sole proprietors as they are for companies.
If you use the cash method of accounting and your taxable turnover for the calendar year does not exceed 200,000 euros, you are entitled to use the cash method of accounting for VAT. The Tax and Customs Board must be informed thereof beforehand either when registering as a person liable to VAT or when switching from the accrual method of accounting to the cash method of accounting. Learn more: Special arrangements for cash accounting for VAT.
More information is available on the website of the Tax and Customs Board: Sole proprietor and value added tax.
Refund of input VAT
If the VAT accounted for in the taxation period is below the amount of input VAT deductible by the taxable person in the same taxation period, the overpaid VAT is refunded to the taxable person in accordance with the procedure laid down in the Taxation Act.
More information is available on the website of the Tax and Customs Board: Refund of overpaid VAT to Estonian taxable persons.
Refund of VAT paid in a foreign country
If you have purchased goods or services for your business in another Member State of the EU and paid VAT in that country, you can claim a refund of the VAT paid. VAT is refunded on the same basis as VAT paid in Estonia, in accordance with the Value-Added Tax Act.
Refund applications must be submitted to the Estonian Tax and Customs Board in the e-MTA e-services environment. The Tax and Customs Board then forwards the application to the tax authorities of the other (refunding) Member State. The substantive part of the application is checked and the decision to refund VAT is made by the tax authority of the refunding Member State.
More information is available on the website of the Tax and Customs Board: Refund of VAT paid in another Member State.
Special OSS and IOSS VAT schemes
On 1 July 2021, the special OSS and IOSS VAT schemes for e-commerce and services entered into force in the European Union. The use of both special schemes is optional; economic operators can apply them (if they so wish) to facilitate compliance with their VAT obligations.
The OSS (One Stop Shop) scheme can be used for intra-Community distance sales and providing services to end consumers in other Member States in which case the turnover from the service is generated and the service is taxed in the Member State of the end consumer.
Economic operators registered in Estonia as a beneficiary of the OSS scheme must file a quarterly OSS return in Estonia declaring the turnover of transactions covered by the OSS scheme arising in another Member State, and pay the VAT charged thereon to the Estonian tax authorities.
The IOSS (Import One Stop Shop) scheme can be used for distance sales of goods imported from a non-EU country to a non-taxable end consumer in a Member State of the European Union, provided that at the time of conclusion of the contract of sale, the goods are located in the non-EU country from which they are sent directly to the end consumer, the value of the goods does not exceed 150 euros, and the goods are not excise goods.
Economic operators who have joined the IOSS scheme can register as beneficiaries of the scheme and declare and pay VAT on the import of all goods covered by the special scheme in one Member State (the Member State of registration) instead of paying VAT in each Member State into which the goods are imported at the time of import.
The IOSS scheme allows the seller to add the VAT due on the import to the selling price of the goods at the time of the sale and, therefore, as a general rule, the buyer does not incur any additional tax liability on receipt of the goods. The seller of the goods also collects VAT from the buyer on payment of the goods and declares it to the tax authorities instead of the buyer doing so, in the IOSS return submitted on a monthly basis.
More information on registering as a beneficiary of the special OSS and IOSS schemes and on the implementation of the special schemes is available on the website of the Estonian Tax and Customs Board.