VAT in Estonia guide

VAT rates

The term “taxable supplies” refers to supplies of goods and services that are subject to VAT.

The following are the VAT rates in Estonia:

• Standard rate: 20%
• Reduced rate: 9%
• Zero rate (0%)

The standard rate of VAT applies to all supplies of goods or services, unless a specific measure allows the reduced rate, the zero rate or an exemption.

Estonian VAT for digital service providers

VAT obligation can arise in Estonia if electronically supplied services are provided to a person whose location/dwelling place is in Estonia and who is not registered for VAT purposes or liable to pay VAT on these services in any other EU Member States.

One-Stop Shop

On 1 July 2021 EU has introduced a so-called “One-Stop-Shop” (OSS) system which has replaced a previously applied “MiniOneStopShop” (MOSS) system. OSS has extended the scope of MOSS from digital goods and services to all goods and services sold B2C in the EU. OSS is an electronic portal that simplifies VAT compliance for online sellers, i.e., online businesses that sell goods and/or services in the EU are now only required to register for VAT in one EU country for all their B2C sales in the EU. If such sellers’ B2C sales in EU are above the applicable threshold, which is 10.000,00 EUR throughout the EU, businesses are liable to charge, collect and remit VAT in the Member State where their B2C buyers are located, instead of the Member State or country of their incorporation, i.e. online sellers have to apply the VAT rate of the Member State where the goods are dispatched or where the services are supplied. AS each EU Member State has an online portal where businesses can register for OSS and submit their VAT returns in one Member State for their B2C sales throughout the EU, it is estimated that VAT compliance costs will be significantly reduced. Registration in the OSS system is available for both – taxable persons established in the EU and outside the EU.

Late – registration penalties

Penalties and interest are assessed for late registration for VAT and delay in remitting the VAT payable to the tax authority.