Estonia’s VAT rate increased to 24%: What businesses need to know

Any business making taxable supplies in Estonia is affected. This includes both resident and non-resident businesses, as well as marketplace operators facilitating business-to-consumer (B2C) sales in the country.

Key areas to check

• Pricing and invoicing: Businesses should have updated their pricing and invoicing to reflect the new VAT rate. Transactions taking place on or after 1 July 2025 are subject to 24% VAT.
• ERP and finance systems: It’s essential that ERP and billing platforms — such as SAP, Oracle Cloud, Oracle NetSuite, Microsoft Dynamics 365, or Workday — are correctly applying the 24% VAT rate to all relevant taxable transactions from 1 July 2025 onwards. This includes ensuring tax codes are updated.
• Credit notes: Businesses must ensure credit notes issued after 1 July 2025 use the correct VAT rate based on the original supply date.
• Contracts and agreements: For services or goods provided across the rate change, VAT may need to be apportioned at the correct rate before and after 1 July.
• Ecommerce, POS systems, and marketplaces: Sellers and platforms should ensure that checkout pricing, VAT-inclusive tags, and order confirmations are aligned with the new rate.

The 24% VAT rate applies to taxable supplies made on or after 1 July 2025. For advance payments received before this date for supplies delivered after 1 July, the new rate generally applies. As with most EU VAT regimes, the tax point — often the date of supply or invoice — determines the applicable rate. Businesses should review transitional rules to ensure correct treatment.

For businesses using Avalara AvaTax or our Cross-Border solution, Estonia’s new VAT rate has been automatically updated as part of our continuously updated tax content.

If your business manages VAT manually, it’s important to ensure all systems and product tax codes reflect the change.

Need help adapting to VAT changes across Europe? Avalara supports VAT rate updates, tax determination, e-invoicing, and VAT returns and reporting — so your business can stay compliant as tax rules evolve. Speak with us today about your VAT challenges.