Estonia’s standard rate is 20%, and a reduced rate of 9% also exists within its tax system. There’s also a zero rating for a small number of services.   

Suppliers of goods or services VAT registered in Estonia must charge the appropriate rate, then collect the tax for onward payment to the Estonian tax authorities through a filing.

Domestic businesses must register for VAT once their annual turnover exceeds €40,000. Businesses must submit their registration application within three days of reaching this threshold. The Estonian VAT act does not specify a registration threshold for non-established businesses. However, taxable persons must register if the value of goods acquired through Intra-Community Acquisitions exceeds the threshold of €10,000. 

In Estonia, a ‘taxable person’ is an individual or entity engaged in business and is either registered or required to be registered. 

Registration applications must be submitted to the Estonian Tax and Customs Board via email or paper.

Non-established businesses must apply in person; however, an authorised person can act on behalf of the business (certain non-EU businesses must appoint a tax representative anyway). The registration process typically takes up to five working days from when the application was submitted.

Once registered in Estonia, businesses must follow local rules, including:

• Issuing invoices with the disclosure details outlined in the Estonian VAT Act

• Using (when required) electronic invoices with proper signature, authenticity, and agreement by the recipient

• Maintaining accounts and records, which must be held for at least seven years

• Processing credit notes and other corrections

• Using approved foreign currency rates

• Following correct invoicing procedures of customers for goods or services in accordance with the Estonian time of supply rules

The tax point (time of supply) rules in Estonia determine when the VAT is due. For imports, it’s the time of importation. The tax point for supplies of goods is the invoice date. This date is used for the tax point regardless of when the actual supply took place. 

The tax point for Estonian services is also the invoice date regardless of when the service was performed or delivered. 

The tax point for intra-community supplies is the 15th day of the month following the month in which the supplies were dispatched or made available to the customer. If the invoice date is earlier than this, then that date will be the tax point.

Invoices must include the following:

• Invoice number and date

• Name, address, and VAT registration number of the supplier

• Customer name and address

• VAT ID of the customer if they are subject to VAT on the supply received

• Description and quantity of the goods or service provided

• Item price 

• VAT amount by VAT rates separately

• VAT amount indicated in euro

• In case a supply is zero-rated or exempt from VAT, the relevant provision of the VAT Act should be indicated

• VAT number, name, and address of the tax representative (if one is appointed) 

• Reference ‘self-billing’ if self-billing is applied