VAT in Estonia – a complete guide. Rates and registration thresholds | VAT in Europe #1

Value Added Tax (VAT) was introduced in Estonia in 1992. Registration, declarations, and compliance with VAT in Estonia regulations are based on European Union directives regarding VAT. These EU regulations were adopted after Estonia joined the EU in 2004. The management of the tax falls under the responsibilities of the Estonian Tax and Customs Board.

Foreign companies and entrepreneurs who are not tax residents in Estonia are subject to mandatory registration. They are obligated to comply with Estonian government regulations regarding VAT, including invoicing and proper tax payments.

There are situations that require immediate registration of foreign entrepreneurs with Estonian tax authorities. Their operations align with the general principles of EU VAT and involve:

• importing goods into Estonia from another country (both within the EU and outside its territories),
• moving goods between Estonia and other EU member states through intra-community sales (both in the form of sales and dispatch),
• buying and selling goods in Estonia,
• selling goods to Estonian consumers via the Internet,
• storing goods in consignment warehouses,
• organizing (paid) exhibitions, events, cultural happenings, conferences,
• utilizing services in Estonia under the reverse charge principle (if the business is not a VAT taxpayer),
• self-supply of goods.

Only a limited number of companies (with specific business profiles) are subject to mandatory VAT registration. When providing services to local businesses in Estonia, foreign companies can benefit from the reverse charge process. This possibility arises from changes introduced by the VAT Package of 2010.

What are the Estonian VAT registration thresholds?

For foreign companies trading in Estonia and simultaneously registered as VAT/GST taxpayers in their own countries, the VAT registration threshold is zero. These companies are obligated to register only upon making their first supply.

Is it required to have an Estonian representative or tax agent?

According to the EU VAT Directive, a locally established Estonian representative is not a requirement for a company based in another EU member state. However, it’s important to note that a fiscal representative, who shares responsibility for Estonian VAT, is required for companies from outside the EU. An exception is made for the provision of online services in Estonia by a company from outside the European Union. In such cases, the company will be obligated to register for VAT with the Estonian tax authorities.

What information is required to obtain an Estonian VAT number and registration?

The Estonian tax office will require the completion of relevant forms (registration forms KR and R2) and their submission along with the following documentation:

• VAT certificate confirming that the company is registered for VAT purposes in another EU location (if applicable),
• company’s articles of incorporation,
• extract from the national trade register of the company,
• evidence that the company will carry out taxable supplies in Estonia,
• copy of the agreement with the fiscal representative (in relevant cases),
• personal ID or passport of the person in charge of the company.

Where are Estonian VAT registrations submitted?

Foreign companies registering for an Estonian VAT number must submit an application to the Tax and Customs Department at the Northern Tax and Customs Center. Forms can be delivered by mail or email, but they must be submitted in person. This can be done by a fiscal representative or another authorized person. Provided that all necessary documents have been submitted, the registration process is typically completed within 5 days.

There are no fines for late VAT registration in Estonia if the due VAT has been paid. However, a penalty of up to 1300 EUR will apply if neither the registration nor the payment is received after the next registration deadline. Authorities may impose an additional penalty of up to 2000 EUR if the subsequent deadline is not met.

VAT in Estonia

RATE	TYPE	TYPE OF GOODS OR SERVICES
22%	standard	all other goods and services not covered by the lower VAT rate,
9%	reduced	some pharmaceutical products, medical equipment for the disabled books (excluding e-books), newspapers and magazines, accommodation in hotels,
5%	reduced	press publications in physical format, as well as issued in electronic form,
0%	zero	intra-Community and international transportation.

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