VAT in Estonia
The standard VAT rate in Estonia rate is 20% from 1 July 2009 and applies for a wide range of goods and services. A reduced rate of 9% applies to several products like books, newspapers, accommodation and medicine. Intra-community supply of goods and export of goods are subject to a zero-rated VAT in Estonia. The same is available for services like health, insurance or postal services.
Estonia applies an extended VAT reverse charge mechanism. If an Estonian VAT taxable person wants to conduct B2B transactions with a foreign entity it can issue an invoice with a zero VAT rate that must contain an explanation or a reference to a legal norm that allows for zero rate application.
Register for VAT in Estonia
If the total value of taxable supplies for a company in Estonia
, either foreign or local, exceeds 16,000 EUR that the respective company is required to register for VAT
. Voluntary registration is also possible even if the threshold is not reached. Usually, the presence of a VAT representative is only required for the registration of non-EU businesses
When registering a non-EU company for VAT in Estonia
, the company owner
must be present, since options like e-mail, post or fax registration are not available. However, if the respective person cannot be physically present, it is possible to use either an authorized person or a tax representative appointed by power of attorney. This person will submit an application for VAT registration in Estonia
with the Northern TAX and Customs Center. They will register the new company as a taxable entity.
Once the procedure for VAT registration in Estonia is completed, the company will receive a VAT number with a form consisting of the country code EE followed by nine digits.
VAT refund in Estonia
Due to Estonia’s membership within the European Union, companies or individuals from EU member states that want to apply for a VAT refund in Estonia can submit an application electronically. The Estonian tax portal accepts claims until the 30th September of the following year. A company applying for VAT refund must provide the proof of VAT registration in Estonia and also copies of the respective invoices. Verification of the documents might last up to 4 months, but after that the company will receive an answer regarding its request for VAT refund.
Intra-community VAT in Estonia
Typically, all foreign traders conducting transactions in Estonia must register for VAT. However intra-community acquisition of goods may be tax-free and in that situation, the registered foreign trader will not be charged any VAT in Estonia.