VAT (Value Added Tax) is a general tax which exists in most countries of the world and applied to the sales of consumer goods and services. VAT is an indirect tax and is collected from the end users. It is calculated as a percentage of the final price of goods and services which was added to the value at every stage of production or sales.
The standard VAT rate in Estonia is 20%
The main principle of the VAT is that this tax is paid at every stage of the production and distribution of goods or services, but only regarding the value added at every stage. At the same time, every participant of the chain may receive partial refund of the paid tax, if their activity was related to procurement used for production of goods or provision of services subject to VAT application.
The enterprises conducting activities in Estonia should be registered as VAT payers as soon as their annual turnover exceeds 40,000 EUR. Also, a company may voluntarily register as an obliged entity regarding VAT before achieving the mentioned annual turnover, if this is required by the special features of the business model of the enterprise.
VAT NUMBER IN ESTONIA
How do I receive the VAT number?
In order to receive the VAT number for an Estonian company, a corresponding application should be submitted to the Tax and Customs Board. The application for receiving the VAT number may be submitted in the online environment of the Tax Board (the electronic signature, using the ID card, the e-Residency or the Mobiil-ID, is required), at the physical facility of the tax service within the territory of Estonia or remotely on the basis of the power of attorney issued in the name of a lawyer or an accountant from our company.
Among other things, the following should be mentioned in the application: the contact data of the company, a brief description of the business activity and specific business partners (including their VAT numbers) with which you are planning to conduct taxable trading operations. Usually the application for receiving the VAT payer number is examined within several working days, but the Tax and Customs Board may ask additional questions and request various documents (contracts, intention approvals, waybills, etc.); therefore, the examination period may be extended.
Obligations of a VAT payer
After the company is conferred the VAT number, the enterprise will be obliged to regularly (monthly) submit the report to the Tax and Customs Board and to pay the value added tax. The obligations of submission of the VAT return to tax authorities and tax payment (if applied) should be fulfilled within a strictly defined period. The violation of the mentioned deadlines may lead to penalties and other negative consequences; therefore, seeking the qualified assistance of the local accounting company is extremely important. Our company has many years of experience in the area of supporting the VAT paying companies, so we will definitely become your reliable partners in terms of VAT and accounting within the territory of Estonia and the European Union.
If you decide to terminate the activities of your enterprise and close your business project, you need to contact the tax service and close the VAT number.
If you are interested in receiving the VAT number for your Estonian company or your enterprise requires qualified accounting support in terms of submission of returns and calculation of the tax burden related to VAT, feel free to contact our accountants and consultants!
The additional information on other accounting services is available on the topic page of our website.
The VAT number in Estonia | Frequently Asked Questions (FAQ)
Below, you will find a list of frequently asked questions in terms of receiving the VAT number in Estonia and further support of the taxable company, which are encountered by our consultants during their work. Familiarization with these materials may be relevant for you.
- What is a VAT number?
The VAT number (Value Added Tax number) is a taxpayer identification number used for application of the value added tax in the countries of the European Union. In Estonia, the VAT number begins with the EE prefix followed by 9 figures.
- How to verify if the company has a VAT number?
You may verify the validity of the VAT number of your counteragent or partner via the online service of the European Commission (VIES).
- Which law governs the issues related to VAT in Estonia?
In Estonia, the legal act governing the issues related to VAT is the Value Added Tax Act.
- What VAT rates are applied in Estonia?
In Estonia, the standard VAT rate of 20% and the reduced rate of 9% are applied. The reduced rate of 9% is applied to books and educational materials, newspapers and printed editions and medications, as well as hotels and other accommodation services with breakfast.
- Where is the VAT report submitted?
In Estonia, the VAT reports are submitted to the Tax and Customs Board.
- What should be quoted in the VAT-related tax return?
The information on the turnover on the transactions, within the framework of which the 20% or the 9% tax rate was applied, is quoted in the VAT return, as well as the information on the turnover regarding international transactions taxable at 0% (the export of goods or the turnover of goods within the European Union).
- What are the terms of submission of the VAT reports?
The VAT report is submitted on a monthly basis – the tax period is a calendar month. The report for the previous month should be submitted to the controlling authority not later than on the 20th day of the current month.
- May I receive the refund of the VAT paid by me?
Yes. In most cases the company may receive the refund of VAT related to procurement of goods and services required for the activity of the company in the context of the turnover subject to VAT and paid within the territory of Estonia. In some cases Estonian companies also may receive the refund of the VAT paid within other EU member states. We recommend requesting the detailed information during individual consultations.
- Is the information on the taxable turnovers of the company confidential?
No. The information on the turnover of the company subject to VAT, as well as on the amount of paid tax, is publicly available and is published in the Estonian Business Register on a quarterly basis.
- Who is responsible for timely submission of the VAT report?
The Board Members (Directors) of the company are responsible for correct and timely submission of the VAT report.
- What happens if the VAT report is submitted untimely?
Correct fulfillment of the obligation of VAT return submission, as well as timely payment of the tax (if applied), is a key to trusting and translucent relationships with tax authorities of Estonia. If the VAT report is not submitted in time, the tax board will give the company a warning and, if the report is still not submitted afterwards, apply punitive measures.
- What happens if the VAT to be paid is not paid on time?
If the VAT to be paid is not paid in time, tax liability is going to arise. The Tax and Customs Board may initiate compulsory collection of debt in the following ways: (1) arrest of accounts; (2) seizure of property rights; (3) application of the restraint on disposition to the property; or (4) transfer of the debt to the bailiff for collection. Before the complete repayment of the debt, in addition to the main demand, the interest in the amount of 0.06% per day (21.9% per annum) is applied to it.
- Are third persons able to receive the information on the tax liabilities of my company?
Yes. All the information on the untimely submitted VAT reports, as well as the data on the amount of tax liabilities, is available to the general public via searching on the website of the Tax and Customs Board, as well as on the portal of the Business Register.