Registering as a VAT payer
A foreign entrepreneur who has a permanent establishment in Estonia must register themselves as a VAT payer in Estonia starting from the date on which the taxable turnover of their transactions exceeds EUR 40 000 as calculated from the beginning of the calendar year.
If a foreign entrepreneur does not have a permanent establishment in Estonia but generates taxable turnover in Estonia, they must register as a VAT payer in Estonia, irrespective of the amount of turnover generated, on the first day of generating turnover for which the person who purchased the goods or services from them cannot be taxed themselves on the basis of the reverse charge procedure because the purchaser does not have a VAT number in Estonia.
If a foreign entrepreneur who does not have a permanent establishment in Estonia transfers goods or provides services here only to persons registered as VAT payers in Estonia, they do not have to register themselves as VAT payers in Estonia.
Irrespective of the amount of turnover generated in Estonia, foreign entrepreneurs do not have to register themselves as VAT payers in Estonia if their entire turnover in Estonia is subject to a 0 % VAT and it does not include intra-Community turnover.
A taxable person of another Member State is required to register in Estonia if the total turnover of their goods transferred to Estonia and other Member States by way of intra-Community distance selling and of digital services provided to non-taxable end-users in Estonia and other Member States exceeds 10,000 euros as of the beginning of the calendar year – the day the limit is exceeded.
The obligation to register in Estonia does not arise if a taxable person of another Member State declares the corresponding turnover in their Member State through the so-called OSS special scheme.
Starting from 1 January 2025, small businesses whose total turnover in the EU does not exceed 100,000 euros and whose turnover in Estonia does not exceed 40,000 euros can join the special scheme for small businesses. This provides an opportunity, similarly to Estonian VAT payers, to use the tax-free threshold and there will be no obligation to register as a VAT payer before the turnover of 40,000 euros is reached. More information is available on the website of the Tax and Customs Board: Special scheme for small businesses (in Estonian).
More information is available on the website of the Tax and Customs Board: Registration as a VAT payer.
An application for registering as a VAT payer that has already been submitted cannot be changed. If it is necessary to bring the date of the registration obligation indicated in the application forward, a new application must be submitted.
The VAT number is unique, a person’s VAT liabilities and/or VAT number may not be transferred to another person.
VAT liabilities for foreign entrepreneurs
The VAT liabilities of foreign entrepreneurs registered as VAT payers in Estonia do not differ from those of Estonian entrepreneurs. They shall also:
- add VAT to the sale price when selling goods or providing services;
- keep VAT records;
- calculate and pay the amount of VAT;
- keep records of transactions and issue invoices that meet the requirements.
A foreign entrepreneur registered as a VAT payer in Estonia does not have to comply with the above obligations for transactions where the other party is a taxable person in Estonia and the foreign entrepreneur does not participate in the transaction through its permanent establishment in Estonia (or has no permanent establishment in Estonia at all). For example, if a foreign taxable person who is registered as a VAT payer in Estonia does not provide a service to an Estonian taxable person through their permanent establishment in Estonia, then the Estonian taxable person must treat them as a foreign person when receiving the service and self-tax the service received on the basis of the principle of reverse charge procedure. This means that a foreign entrepreneur taxes such a service with a VAT of 0 % and submits an invoice to the Estonian tax payer with reference to the reverse charge procedure and declares this service in the country where the entrepreneur is established and not in the VAT return submitted in Estonia.
The VAT paid on the acquisition of goods or services used for the purposes of the taxable turnover (input VAT) is deductible from the taxable turnover.
VAT rates in Estonia
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.
VAT declaration and payment in Estonia
The VAT taxation period for foreign entrepreneurs in Estonia is also a calendar month. The VAT return and the annex thereto must be submitted and the tax paid to the Tax and Customs Board by the 20th day of the month following the tax period.
On the basis of a reasoned request made by the taxable person, the Estonian tax authority may establish for foreign entrepreneurs a taxable period longer than one calendar month. This prolonged 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. It is possible to apply for a tax period longer than a calendar month regardless of the amount of the turnover. In this case, too, value added tax returns shall still be submitted to the tax authority by the 20th day of the month following the taxable period.
You can submit declarations electronically via the Tax and Customs Board’s portal e-MTA or by contacting the Tax and Customs Board’s service points. If you have been liable for VAT for at least 12 months, you are obliged to submit a VAT return electronically.
Read more about submitting VAT returns on the Tax and Customs Board webpage.
Refund of input VAT
If value added tax calculated during a taxable period is less than the amount of input VAT deductible by the taxable person during the same period, the overpaid amount of value added tax shall be refunded to the taxable person pursuant to the procedure provided for in the Taxation Act.
Refund of VAT paid in Estonia to a foreign taxable person
If a foreign taxable person has acquired goods/services necessary for their business from Estonia and has paid Estonian VAT, they can apply for a refund of the VAT paid in Estonia.
The taxable person from another Member State must submit the refund application electronically in their Member State and the tax authority of the Member State in which they are established shall forward the application to the Estonian tax authority. The substantive part of the application is checked and a decision on the refund of the amount of VAT is taken by the Estonian tax authority.
More information is available on the website of the Tax and Customs Board: Calculation and refund of VAT.