Registering as a VAT payer
If the taxable annual turnover of your company exceeds 40 000 euros, you are required to register the company with the Tax and Customs Board as a VAT payer. If turnover is below that limit, registration is not obligatory. Also in many cases the turnover is not taxable in Estonia (even if it exceeds €40,000) and the VAT number must be obtained in other county instead of Estonia,
Important note: if company trades in a country other than Estonia, the goods do not enter Estonia at any point of the trading cycle or the provision of services is not done from Estonia, then it is likely that the company will be subject to VAT and other taxes in the country where the actual trading is performed. The Estonian VAT in this instance is not required and not issued. The exception is a limited VAT liability, which may have to be applied in Estonia in these circumstances.
VAT-related obligations in Estonia
As a VAT payer in Estonia, the company is required to:
- add VAT to the sales price when selling goods or providing service
- keep accounting for value-added tax
- calculate and pay the VAT amount
- to retain documents related to transactions and to present invoices in conformity to the requirements.
Company may deduct from taxable supply VAT paid upon acquiring a good or service used for taxable supply (input VAT).
The general VAT rate is 20% of the taxable value of a good or service.
A tax rate of 9% applies to some goods and services – for instance books (including textbooks and workbooks), periodicals, accommodation services, and medicines, health and hygiene products specified by the Ministry of Social Affairs, and medical equipment for use of disabled persons.
A 0% VAT rate is in effect for a number of goods, including exported goods, and consultation services provided to VAT payers in another EU member state as well as for watercraft and aircraft used in international traffic. A 0% VAT rate also applies to services provided outside Estonia, a number of services related to water and air transport and carriage of goods. The supply of a number of goods and services with a social orientation is tax-free, such as postal services, insurance, health care and social services. For a full list of the VAT exemptions, consult The VAT Act.
Declaring and paying VAT
The taxation period for VAT is a calendar month. Companmy is required to file a value-added tax return and pay VAT to the Tax and Customs Board by the 20th day of the month subsequent to the taxation period.
Tax calendar of a person liable to VAT
|Term||Obligation||Who has to submit|
|Monthly, by the 20th of each month||Submission of the VAT return (Form KMD) and appendix to the value added tax return (Form KMD INF) Payment of VAT||All persons liable to VAT|
|Monthly, by the 20th of each month||Submission of the recapitulative statement (Form VD)||Persons liable to VAT who are selling goods or providing services to the VAT liable persons of other EU Member States|