- Registering as a VAT payer
- VAT-related obligations
- VAT rates
- Declaring and paying VAT
- VAT for a sole proprietor (FIE)
- Refunding VAT to a taxable person in another Member State
- VAT refund to non-EC businesses
Value-added tax, known as VAT, is levied on goods and services sold in the course of business, import of goods from non-EU countries and acquisition of goods from European Union countries. Value-added tax is paid by the end consumer.
If the taxable annual turnover of your company exceeds 16 000 euros, you are required to register the company with the Tax and Customs Board as a VAT payer. If turnover is below that limit, registration is not obligatory.
As a VAT payer, you are required to:
- add VAT to the sales price when selling goods or providing service
- keep accounting for value-added tax
- calculate and pay the VAT amount
- to retain documents related to transactions and to present invoices in conformity to the requirements.
You may deduct from taxable supply VAT paid upon acquiring a good or service used for taxable supply (input VAT).
The general VAT rate is 20% of the taxable value of a good or service.
A tax rate of 9% applies to some goods and services – for instance books (including textbooks and workbooks), periodicals, accommodation services, and medicines, health and hygiene products specified by the Ministry of Social Affairs, and medical equipment for use of disabled persons.
A 0% VAT rate is in effect for a number of goods, including exported goods, and consultation services provided to VAT payers in another EU member state as well as for watercraft and aircraft used in international traffic. A 0% VAT rate also applies to services provided outside Estonia, a number of services related to water and air transport and carriage of goods. The supply of a number of goods and services with a social orientation is tax-free, such as postal services, insurance, health care and social services. For a full list of the VAT exemptions, consult the VAT Act.
The taxation period for VAT is a calendar month. You are required to file a value-added tax return and pay VAT to the Tax and Customs Board by the 20th day of the month subsequent to the taxation period. You may file the value-added tax return by using the electronic Tax and Customs Board or contacting the Tax and Customs Board’s regional tax centre. If you have been a VAT payer for at least 12 months, you will be required to submit the VAT return electronically.
As a sole proprietor, you must pay VAT if you are registered as a VAT payer. Similarly to companies, you will be obliged to register when your turnover exceeds 16 000 euros (250,000 kroons) a year. The VAT rates are the same for FIEs as they are for companies. If you use the cash method of accounting, you are entitled to use the cash method of accounting for VAT as well, but you must notify the Tax and Customs Board thereof upon registration as a VAT payer.
Refunding VAT to a taxable person in another Member State is executed on the same basis as refunding value added tax in Estonia.
Claims for refunds must be submitted electronically via the tax authority of the entrepreneur’s country of location, who, in turn, shall forward the application to the Estonian tax authority.
VAT paid by a taxable person of another Member State in Estonia upon the import or acquisition of goods or receipt of services used for the purpose of business being carried out in the country of location of the person shall be refunded to the taxable person of another Member State on the basis of an application from the taxable person and pursuant to the procedure established by a regulation of the minister responsible for the area if:
- in its country of location the taxable person has the right to deduct input value added tax paid upon the import or acquisition of goods or receipt of services under the same conditions from its calculated value added tax;
- taxable persons of Estonia have the right to deduct, pursuant to this Act, input value added tax paid upon the import or acquisition of goods or 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 euros per calendar year or at least 400 euros in the case where the application is submitted concerning a period shorter than a calendar year but covering at least three months.
What can not be refunded
VAT incurred which relates directly to activities which are exempt without the right to deduct.
VAT incurred on expenses on which there are restrictions on the right to deduct in the Member State of Refund.
If the invoice or import document relates to an expense that is part business and part personal, the applicant must provide only the amount of the business part.
In Estonia the authorities will only grant refunds to non-EU based businesses if the authorities in the non-EU country offer similar refund arrangements as athose for businesses based in Estonia.