VAT Registration in Estonia

The value added tax (VAT) is the most important indirect tax in Estonia for which foreign and local companies must register. Below, our company formation agents in Estonia provide a thorough description of the VAT registration procedure. We can assist foreign investors setting up companies here with the Estonia VAT registration procedure as part of the business incorporation process.

Quick Facts
We offer VAT registration services	YES, we offer support in VAT registration in Estonia
Standard rate	22%
Lower rates	9% (books, medical products, accommodation services), 5% on press publications, 0% (exported goods, intra-community supply of goods, international transport of passengers)
Who needs VAT registration	Domestic and foreign companies, sole traders and other economic operators supplying VAT-taxable goods and services
Timeframe for registration	Approx. 30 days
VAT for real estate transactions	Standard 22% rate applies to real estate transactions
Exemptions available	YES, goods and services provided for social purposes, financial services supplies
Period for filing	Monthly filings are required
VAT returns support	YES, our accountants in Estonia offer VAT return filing support
VAT refund	YES, VAT refunds are available for non-EU companies for goods and services not exceeding EUR 320 per year, for EU companies, and foreign citizens
Local tax agent required	No, however, outsourced accounting services are available
Who collects the VAT	VAT is collected by the Estonian Tax and Customs Board
Documents for VAT registration	Application form issued by the Tax and Customs Boards, information about the company (Articles of Association, extract from the Trade Register)
VAT number format	Country code EE followed by 9 digits
VAT de-registration situations	VAT de-registration in Estonia occurs in cases of company dissolution, the company no longer meets the mandatory registration thershold, the company no longer provides or sells VAT-taxable services, respectively goods
Voluntary registration availability (YES/NO)	Yes, voluntary VAT registration is also available in Estonia.
VAT registration for sole traders	Yes, if the sole trader registers intra-community sales or purchases of goods/services.
Special requirements for Estonian branches (if any)	The parent company must apply for an Estonian VAT number on behalf of the branch.
VAT registration requirements for liaison offices (YES/NO)	No
VAT for buying and selling online products	Sellers must pay the VAT on the products/services they sell in Estonia.
VAT registration requirements for e-commerce companies (if any)	Yes, when reaching a turnover of EUR 35,000
Record-keeping requirements	7 years
Requirement to issue invoices containing the VAT	Yes, invoices must contain the VAT rate and value
Invoice content	– seller’s name and address, – company registration number, – VAT code, – price with and without VAT, – name and quantity of product/service sold, – VAT rate, – total price
Possibility to issue simplified invoices (YES/NO)	Yes, for passport transport services, parking meters, petrol sales
Invoice issue time limit	7 days
Penalties for late VAT returns	Yes, up to EUR 3,100 for late or failure to pay the VAT
EORI registration option (YES/NO)	Yes
VAT number required for EORI registration (YES/NO)	Yes, a VAT number is mandatory for EORI registration.
Availability of the reverse charge mechanism (YES/NO)	Yes, the reverse charge mechanism is available in Estonia.

Estonian VAT registration requirements for foreign operators

The VAT registration threshold is zero for international companies doing business in Estonia who are VAT registered in their home countries. As soon as they make their first supply, businesses must register.

The threshold is €35,000 per year for businesses (that are registered for EU VAT) who offer products to consumers in Estonia via the internet.

A corporation based in another EU member state is not needed to have a local Estonian fiscal representation or agent under the EU VAT Directive. For non-EU businesses, a fiscal representative is necessary who is jointly accountable for the Estonian VAT. The provision of services to Estonia by a non-EU corporation via the internet is an exception to this rule. In this scenario, the business would have to register for VAT directly with the tax authorities in Estonia.

The necessary forms (application forms KR and R2) must be filled out and submitted with the following supporting documentation to the Estonian tax authority:

1. VAT certificate to demonstrate that the company is registered for VAT in another EU country (if applicable);
2. company’s Articles of Association;
3. an extract of the registration certificate for the business issued in its home country;
4. confirmation that the company will make taxable shipments in Estonia
5. a duplicate of the fiscal representative’s appointment for non-EU enterprises;
6. identity card or passport of the fiscal representative.

Feel free to address our local specialists for information on the requirements to be met by foreign companies for VAT registration in Estonia.

Regardless of the sector in which you operate, you can rely on us for accounting services in Estonia in addition to those related to business incorporation. We provide customized accounting solutions based on the requirements of your company. We invite you to get in touch with us for more information if you have any queries about how our accountants can assist your business.

What does VAT registration imply for an Estonian company?

Upon starting a business in Estonia, VAT registration is not part of the mandatory steps required upon incorporation, therefore, company owners must pay attention to this aspect. Estonia VAT registration can be completed voluntarily when applying for the tax identification number, this way, avoiding the mandatory registration procedure later. Companies that do not want to register for VAT at the beginning of their operations, however, can wait until the mandatory turnover is reached and then obtain the VAT number. Either way, business owners must know from the start if they will produce, sell and/or provide VAT-taxable goods, respectively services and comply with the accounting requirements imposed in this country.

Upon registering a company for VAT in Estonia in 2024, the following steps must be completed:

1. the owner must establish if the company is required to register for the VAT, in accordance with the projected annual taxable turnover;
2. file the application for VAT registration alongside information about the company;
3. receive the registration notification and the VAT number.

It should be noted that the notification will be sent to the company’s legal address found in the company’s Articles of Association. If any changes are made with respect to the address, these should be notified to the Trade Register. Our company formation officers in Estonia can assist with these procedures.

VAT registration in Estonia can take up to 5 business days for both local and foreign companies.

Estonia VAT registration – applicability of this tax

The value added tax is collected by Estonian companies producing and supplying goods and services, however, it is charged on the final consumer, which is why it is called an indirect tax. In order to collect the VAT, companies must first register with the tax authorities and obtain VAT numbers.

The value added tax is an indirect or consumption tax and it is levied on all goods and services produced and sold in Estonia, as well as to those imported into the country. Considering most companies in Estonia are required to apply for VAT registration, they must also meet specific requirements prior to applying for the VAT number.

The VAT is levied at a standard rate while reduced rates apply to various goods and services, however, the registration requirements remain the same no matter the rate the tax is collected at.

Special attention must be paid to VAT-exempt goods, however, there are cases in which companies are required to file for Estonia VAT registration in order to prove the exemption from this tax.

Once registered for VAT, a company is required to collect the tax and then direct it to the tax authorities in Estonia.

The format of a VAT number in Estonia is made of the prefix “EE” for the country code and 9 digits, such as EE123456789. The same number can also be used to register for the EORI system.

Companies in Estonia will be able to use the reverse charge mechanism for cross-border sales of goods and services between VAT-registered entities in the European Union if registered as active VAT-EU taxpayers.

Feel free to address our Estonian company formation officers for details on the advantages of obtaining a VAT number.

Estonia VAT registration can be easily completed with the help of our specialists.

VAT rates in Estonia

The standard VAT rate in Estonia is 22% from 1st of January 2024 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.  

New VAT rates

A number of adjustments to the Tax Code were approved by the newly elected Estonian Parliament and will go into effect in 2024 or 2025.  Tax rates are a major factor in many of these adjustments. Beginning on January 1^st, 2024, the regular VAT rate will rise from 20% to 22%. Press releases and lodging services (such as renting out hotel rooms) will see an increase in their reduced VAT rates on January 1^st, 2025. The government has stated that the primary goal of these adjustments is to raise tax revenue in order to balance the state budget.

The reduced VAT rate of 9% will no longer be applicable to accommodation services as of January 2025. Instead, a new reduced rate of 13% will be used to compute VAT on accommodation services.

If turnover is generated by providing accommodation services in 2025, a taxable person implementing special arrangements for cash accounting for VAT is entitled to declare and pay VAT at the reduced rate, even if the relevant service has already been rendered and an invoice for the accommodation services was issued prior to January 2025.

Other requirements related to VAT registration 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. We can also advise in EORI registration in Estonia.

The scheme below present the main requirements for registering for VAT in Estonia:

Who is required to register for VAT in Estonia?

Estonia VAT registration is not mandatory for all taxpayers in the country, nor is it required to obtain VAT numbers upon the incorporation of a business. The following registration requirements apply in Estonia:

1. Estonian citizens and sole traders supplying VAT-taxable goods and services in Estonia;
2. Estonian sole traders involved in import/export activities of goods subject to the VAT;
3. local companies importing/exporting and supplying VAT-taxable goods and services in Estonia;
4. foreign companies operating through permanent establishments in Estonia and supplying VAT-taxable goods and services;
5. non-operating foreign companies offering a VAT-taxable supply of goods and services in Estonia one time only.

Other important aspects to consider when discussing VAT registration is that mandatory it becomes mandatory to obtain a VAT number in Estonia when a certain turnover is reached.

Our company registration specialists in Estonia can offer more information on the requirements related to VAT registration.

VAT registration thresholds in Estonia

As mentioned above, when opening a company in Estonia, the respective entity does not automatically become liable to pay the VAT. If the business does not register for VAT voluntarily, upon the reaching of a certain turnover, it is required to apply for a VAT number in Estonia.

Once the following thresholds are reached, VAT registration becomes mandatory:

• – 40,000 euros for companies with a turnover at the beginning of a calendar year;
• – 35,000 euros for foreign companies selling goods over the internet to Estonian customers.

VAT registration must be completed with the Estonian Tax and Customs Board, just like when applying for an EORI number.

If you want to open an Estonian company, our local consultants can help you. Running a company in Estonia also implies respecting various industry-related laws. For example, businesses that operate under a crypto license in Estonia must comply with the Anti-Money Laundering Act which outlines the requirements for a digital coin to qualify as a security that may be traded. Additionally, such companies must also adhere to minimal management standards.

Documents required for Estonia VAT registration in 2024

There are several documents to be filed when applying for a VAT number in Estonia, depending on whether the taxpayer is a natural person, a local or foreign business entity operating here. No matter the legal personality of the applicant, the documents to be filed are:

• – the Articles of Association in the case of companies, and business license in the case of sole traders;
• – an extract issued by the Estonian Trade Register which must contain information about the company;
• – documents proving the company will provide taxable supplies in Estonia;
• – identification documents of the person representing the company.

In the case of foreign companies, VAT certificates issued in their home countries are required when registering for this tax in Estonia.

Foreign companies requesting VAT registration in Estonia in 2024 must file their application forms with the Tax Management Department at the Northern Tax and Customs Centre.

Foreign companies in Estonia – additional VAT registration

Foreign companies can operate through branch offices and subsidiaries in Estonia. While the latter will be treated as a domestic business, the former is required to complete the Estonia VAT registration procedure.

VAT registration in the case of foreign companies operating through branches in Estonia is the same as for local businesses, however, additional documents about the parent company will be required by the tax authorities.

Another important aspect to consider about Estonia VAT registration is related to e-commerce companies which are now required to obtain such numbers under specific conditions imposed by the EU.

You can rely on our Estonian company formation agents for support in running an e-commerce business under the new tax regulations.

VAT compliance requirements in Estonia

The following requirements must be met by VAT-registered entities in Estonia, in accordance with Section 36 of the Value Added Tax Act:

• – keep copies of invoices for items purchased or services rendered by or on behalf of the person in chronological order for 7 years as of the date of their issue or receipt;
• – maintain daily records of taxable supply and supply exempt from tax, calculated value added tax and input value added tax;
• – keep records of any goods shipped or delivered by the taxable person to another Member State, as long as they are not considered intra-Community purchases;
• – maintain accurate records of any movables brought into Estonia by the taxable person from another Member State, as specified in Section 8(3) of the Value-Added Tax Act;

The VAT taxable period in Estonia is monthly. VAT returns and reports must be filed no later than the 20^th of the following month after the taxable period.

If the VAT owed has already been paid, there are no penalties for delayed Estonian VAT registration. However, if neither registration nor payment have been received by the time a new registration deadline has been published, a fine of up to EUR 1,300 would be imposed. If a later deadline is missed, the authorities may issue an extra fine of up to EUR 2000.

We recommend using our accounting services in Estonia to ensure all VAT compliance requirements are respected.

Exceptions from VAT registration in Estonia

Not all Estonian companies are required to register for VAT, and among we mention the following:

• – companies with annual taxable turnover derived from zero-rated supplies of goods and services;
• – companies that do not meet the mandatory registration turnover;
• – companies projecting their turnover to be lower due to various reasons.

Even if in these cases Estonia VAT registration is not required, must monitor their annual turnover and in case of changes apply for VAT numbers.

If you want to open an Estonian company and do not know if to register for VAT from the beginning, you can ask our local representatives for information.

Advantages of registering for VAT in Estonia

Even if VAT registration is not imposed upon company formation in Estonia, it has certain advantages. Among these, the possibility of applying for VAT refunds and claim the amounts of money paid in the account of this tax is one of the most important. Also, tourists buying goods from VAT-registered companies in Estonia have the possibility of claiming VAT refunds.

Voluntary VAT registration in Estonia is based on the filing of a business plan which indicates reaching the expected turnover which leads to mandatory registration.

Our Estonian company formation representatives can offer more information on the advantages of obtaining VAT numbers.

Aspects to consider when applying for Estonian VAT registration in 2024

There are a few important aspects to consider when applying for VAT numbers:

• – once a company reaches the registration threshold, it has 3 days to apply for a VAT number;
• – the issuance of the VAT number by the tax authorities in Estonia takes 5 days;
• – failing to register for VAT when it becomes mandatory implies a penalty of 1,300 euros;
• – failing to file VAT returns in due time results in a penalty of 2,000 euros.

If you have recently opened a business and plan to register it for VAT in Estonia in 2024, our specialists are at your service.

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. 

If you need information on VAT registration of Estonian companies and the benefits of this procedure in 2024, our agents can guide you. You can also watch our video on this subject:

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. 

VAT registration in 2024 in Estonia can be used for the intra-community imports and exports and the procedure does not imply additional steps. 

Even if it is best to register an Estonian company for VAT alongside the incorporation procedure, those who want to wait until later in 2024 to obtain their VAT numbers, can do that without any problem.

Estonia VAT registration and EORI numbers

Once of the most important advantages of Estonia VAT registration completed on a voluntary basis is the possibility of obtaining an EORI number easier. As an EU member state, Estonia has adhered to the Economic Operators Registration Identification system and trading operations (both import and export activities) must be completed based on EORI numbers with EU customs authorities.

At the level of 2024, Estonian companies engaged in customs operations without having VAT numbers must first register for VAT and then for the EORI system. This is a mandatory requirement, as the EORI number is partially made from the company’s VAT number.  In order to provide specialist help based on the VAT and EORI registration procedures, our Estonian office is made up of a broad team of experts, including accountats. For assistance with tax-related matters, they have in-depth information and solutions on this subject.

Please contact our company formation specialists in Estonia for more information on VAT registration.