Key takeaways
- Estonia VAT rates: The standard VAT rate is 24%, with a 9% reduced rate and a 0% rate for intra-EU and international transport services.
- Registration threshold: Resident businesses must register once turnover exceeds €40,000, while non-EU companies must appoint a fiscal representative.
- Filing & penalties: VAT returns are filed monthly, and late filings or payments can result in fines up to €32,000 plus daily interest of 0.06%.
As with other countries, Estonia has its own set of VAT (Value Added Tax) regulations that are crucial for businesses operating within its borders. This guide provides an in-depth look at the Estonian VAT system, outlining VAT rates, registration necessities, and other key details.
What is the Estonia VAT rate?
In Estonia, VAT, or Käibemaks (KM) as it's locally known, is a fundamental component of the country's fiscal system. The standard Estonia VAT rate is 24%, with a reduced rate of 9% and a zero VAT rate for certain goods and services.
Registering for VAT in Estonia
Both local and foreign businesses engaged in taxable activities within Estonia are required to register for VAT. The registration threshold for local businesses is €40,000, whereas foreign businesses must register for Estonia VAT regardless of their turnover.
For EU-wide cross-border ecommerce, the distance-selling threshold is €10,000. If a business exceeds this amount in annual sales to Estonian customers, VAT registration becomes mandatory. Registration is also required for businesses storing goods in Estonia or using fulfillment services like Amazon's FBA (Fulfilled-by-Amazon).
Businesses should apply to the Estonian Tax and Customs Board to register for VAT and receive an Estonia VAT number. The registration process usually takes no more than a week to complete from the time of submitting your application.
Fiscal representation in Estonia
Estonia requires non-EU businesses to appoint a fiscal representative for VAT registration. This representative is responsible for ensuring VAT compliance on behalf of the non-resident company.
Estonia VAT return filing and penalties
Estonia VAT returns must be filed monthly, regardless of the company's sales volume. Returns should be submitted electronically (recommended but not compulsory) via the Estonian Tax and Customs Board’s portal by the 20th of the month following the reporting period.
Penalties for late submission of an Estonian VAT return can reach up to €32,000. Late payment of VAT will incur daily interest of 0.06%.
Estonian Intrastat declarations
Businesses trading within the EU that exceed annual thresholds of €400,000 for arrivals and €270,000 for dispatches must submit Intrastat declarations. These are due by the 10th of the following month. Late filings or inaccuracies may result in fines of up to €2,000.
Reverse charge in Estonia
The reverse charge mechanism in Estonia is applied to specific transactions, including services from non-residents, intra-community acquisitions, and certain domestic supplies. This mechanism transfers the responsibility of VAT reporting and payment from the supplier to the recipient.
Frequently asked questions
What is the VAT rate in Estonia?
Estonia’s standard VAT rate is 24%, with a reduced rate of 9% applying to items such as medicines, books, and hotel accommodation. A 0% rate applies to intra-EU and international transport services.
When do I need to register for VAT in Estonia?
Resident businesses must register once annual turnover exceeds €40,000. Non-resident businesses must register immediately upon carrying out taxable activities. The EU-wide distance selling threshold of €10,000 also applies.
How do I register for VAT in Estonia?
Applications are submitted to the Estonian Tax and Customs Board. Once processed, you’ll receive your Estonian VAT number—typically within one week.
Do foreign businesses need a fiscal representative in Estonia?
Yes. Non-EU companies must appoint a fiscal representative, who is jointly responsible for ensuring VAT compliance and payment in Estonia.
How often must VAT returns be filed in Estonia?
All VAT-registered businesses must file monthly VAT returns, regardless of turnover. Returns are due by the 20th of the following month, and can be filed electronically through the Tax and Customs Board portal.
Are Intrastat declarations required in Estonia?
Yes. Intrastat declarations are required if annual EU trade exceeds €400,000 (arrivals) or €270,000 (dispatches). They must be filed by the 10th of the following month.
