VAT in Estonia: the rates, the returns and where OSS fits

When must an Estonian company register for VAT?

An Estonian company must register for VAT once its supply with a place of supply in Estonia passes €40,000, counted from the start of the calendar year.

The application must reach EMTA within 3 working days of the day the threshold is exceeded. What counts towards it is wider than taxable sales alone.

The 3 working days start on the day the running total passes the line, not at the end of the month or the year — so it pays to watch the total as it grows, not only when the year closes.

The count is per company and per calendar year, and it starts again from zero at the start of each year. It measures what the company supplies, not what it earns: a business with thin margins can pass the line long before it shows a profit.

What counts towards €40,000?

Two consequences follow. A company whose whole supply is exempt or taxed at 0%, with no intra-Community supply of goods, has no obligation to register, whatever the amount. But a company that rents out dwellings as its main business and sells a little taxable training on the side must register once the two together pass the line: regular exempt rent counts.

Where you stand today, from your own figures, is one question away in the VAT registration check.

When does a company need a VAT number before €40,000?

Two kinds of purchase can oblige an Estonian company to register for VAT sooner: listed services from a foreign business not registered in Estonia, whatever the turnover, and goods from other EU countries above €10,000 in a calendar year.

It registers as a taxable person with limited liability: it pays VAT on those purchases and deducts no input VAT.

• Full registration

  €40,000turnover in Estonia, per calendar year

  The general rule above. Apply within 3 working days of crossing it; from then on the company’s return sets the VAT on its supplies against the input VAT on its costs.

• Limited registration: services

  Any amountof listed services from a foreign business not registered in Estonia

  Advertising, electronically supplied services, consultants, accountants, lawyers, data processing and more — from a supplier inside or outside the EU — unless an EU supplier uses its own country’s small-business exemption (its VAT number ends in EX). Apply within 3 working days.

• Limited registration: goods

  €10,000of goods from other EU countries, per calendar year

  Goods bought from businesses in other member states; excise goods and new means of transport aren’t counted. Apply within 3 working days of passing it.

• Limited for services, then goods pass the limit

  3 working daysto tell EMTA in writing

  A company registered with limited liability for services only doesn’t apply again: it notifies EMTA in writing that its goods from other EU countries have passed €10,000.

A limited registration is narrow. The company pays Estonian VAT on the listed services, by reverse charge, and on the goods — and it can’t deduct input VAT. The rule doesn’t apply to a company already registered for VAT in full, so a company never holds both registrations at once.

Take a new OÜ with no sales yet that pays for advertising billed by a business abroad which isn’t registered for VAT in Estonia. It has sold nothing, and it still has to register with limited liability within 3 working days and pay Estonian VAT on the ads.

Either way, the limited registration applies from the day the obligation arose, not from the day the application is processed — so the VAT on purchases made in between is still due.

The list of services is longer than the card can show. It also covers the use of intellectual property, financial and insurance services, staff placed by an agency, the hire of movable things other than vehicles, translation and electronic communications. It goes by what a contract supplies, not by the supplier’s trade: granting or transferring the right to use intellectual property is on it, and so are engineering services — so read a designer’s or developer’s contract against it before you sign.

Which VAT rate applies to what in Estonia?

Estonia’s standard VAT rate is 24%. Accommodation is taxed at 13%, and books and educational literature, listed medicines and medical devices, and press publications at 9%.

Exports and intra-Community supply of goods are taxed at 0%, together with the further cases the VAT Act lists.

The accommodation rate covers the stay itself, with or without breakfast. Anything sold alongside it — a dinner, a spa visit, a parking place — is taxed as what it is.

The rate follows what is sold, so a business that sells in more than one category charges more than one rate: a hotel with a restaurant, or a publisher that also sells merchandise, splits its invoices accordingly.

The former super-reduced rate no longer exists. It was repealed from 1 January 2025, when press publications moved to the 9% rate — a price list that still shows it is out of date.

A 0% sale is still a taxable sale, not an exempt one. It counts towards the €40,000 threshold, and a company registered in full deducts the input VAT on what it buys for it, as for any other taxable supply.

When does an invoice carry Estonian VAT?

It depends on who buys and where. A customer in Estonia pays Estonian VAT. A business in another EU country gets an invoice without it: the reverse charge for a service, or an intra-Community supply of goods.

Consumers elsewhere in the EU and buyers outside the EU follow rules of their own.

The default has exceptions. Services connected with property, passenger transport, admission to events, restaurant and catering services and the short-term hire of a means of transport follow rules of their own, so check those before you invoice.

The same rule runs the other way. When an Estonian company registered for VAT in full buys a service from a business in another EU country that is not registered for VAT in Estonia, the place of supply is Estonia and the company accounts for the VAT itself, in its own return. A company not registered for VAT at all has to do so only for the listed services, through a limited registration.

The words “reverse charge” are required whenever the reverse charge applies — even when the supply is exempt or taxed at 0%. The supplier’s own VAT number goes on the invoice too, and the customer’s can be checked in the European Commission’s VIES.

How do VAT returns work — and in a month with no sales?

An Estonian company registered for VAT files form KMD and pays the VAT by the 20th of the month after each taxable period — a calendar month, unless EMTA sets a longer one on request.

Registered in full, it files for every period, a nil return included; registered with limited liability, only for a period with the listed purchases.

1. The taxable period ends

   Usually the calendar month. Every invoice issued and received in it belongs to its return.

2. Form KMD by the 20th

   The company files the return for the period by the 20th of the following month.

3. The VAT is paid

   By the same day — the VAT on its supplies, less the input VAT it may deduct.

Registration in full works both ways. In the same return the company declares the VAT on its supplies and deducts the input VAT on what it bought for its taxable supply; only the difference is paid.

A taxable person with limited liability deducts nothing. Its return carries only the VAT on the listed services and goods it bought, and only for the periods in which it bought them.

A company with no activity at all still has returns to file if it is registered in full — what a dormant Estonian company still has to file lists the rest of its obligations.

Every KMD and TSD date of the year is in the tax calendar for an Estonian OÜ, with a file to add them to your own calendar.

What is OSS, and do you need it?

OSS, the EU’s One Stop Shop, is an optional scheme for the VAT due in other EU countries on sales to consumers.

Up to €10,000 a year of distance sales of goods and telecom, broadcasting and electronic services to consumers across the EU, a supplier may charge its own VAT; above it, the customer’s country’s VAT applies.

OSS covers supplies to consumers only — never sales to other businesses.

The €10,000 test looks at this year and last year, for all the other EU countries together, and it is only for a supplier established in one member state. A seller that passed it last year owes the customer’s country’s VAT from the first such sale this year.

An example in words: an OÜ that ships goods to consumers in Germany, France and Spain may charge Estonian VAT while those sales, across all the other EU countries together, stay at or under €10,000 this year and last. Once they pass it, each sale carries the VAT of the customer’s country, declared through OSS every 3 months.

“Established in one member state” is meant literally: the supplier is established there, or, without an establishment, has its permanent address or usually resides there — and in no other member state. A business established in several can’t use the €10,000 threshold at all.

Other services to consumers abroad — anything beyond telecom, broadcasting and electronic services — follow their own place-of-supply rules, which this threshold doesn’t change.

Once a company opts in, the scheme covers every supply that falls under it, in every member state: it can’t keep some countries out of it.

Questions about VAT and OSS