VAT Registration in Estonia 🇪🇪
In Estonia, businesses must register for VAT if their taxable supply exceeds €40,000 or if their intra-Community acquisition of goods exceeds €10,000 from the beginning of the year. Parent companies and subsidiaries can register as a VAT group. Applications for registration or removal must be submitted to the Estonian Tax and Customs Board.
👋 Have you reached the VAT threshold? Planning to commence trading or in need of a VAT number since your incorporation date? Regardless of the reason, don’t spend valuable time contacting Estonian Tax Authorities to inquire about your business partners. Entrust the process to Eesti Consulting, a professional company with extensive experience in VAT matters. Delegate your VAT registration to us for a quick and efficient process. Obtain your VAT EE number promptly, receive the VAT registration certificate, and showcase your VAT number on the VIES website – Register your company for VAT purpose with Us OR Buy VAT Registered Estonian Company.
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VAT Registration – when shall we register?
| Situation | VAT Registration Requirement |
|---|---|
| Starting a new business in Estonia | VAT registration is optional initially. 🌱 Assess your business activities and decide whether VAT registration is necessary. |
| Exceeding the VAT registration threshold (Estonia) | Register when your taxable turnover exceeds EUR 40,000 from the beginning of a calendar year. 💼 |
| Register foreign company to VAT in Estonia | If a foreign company has no seat in Estonia but makes taxable supplies, VAT registration is required. Ensure compliance with Estonian tax regulations. 🌍 |
VAT Rate – 20% or 22%?
The standard VAT rate will increase from 20% to 22% from 1 January 2024.
VAT REGISTRATION NUMBER IN ESTONIA
Understanding Value Added Tax (VAT) and Taxable Persons 🌐💼
Value Added Tax (VAT) is a crucial aspect of business operations, and in Estonia, it is governed by the Value Added Tax Act . Here’s a simplified explanation of who is considered a taxable person under this law:
Definition of a Taxable Person: According to § 3 of the VAT Act, a taxable person is someone engaged in business, whether a natural or legal person, resident or non-resident. This includes legal entities in public law or entities controlled by the state, rural municipality, or city authority. To be considered a taxable person, registration is necessary, or one must be required to register (§ 19). 📋👥
Foreign Taxable Persons: A foreign taxable person, whether an individual or an association without legal person status, is recognized as a person liable for VAT based on the legislation of their home country. This includes those treated as taxable persons according to the laws of their respective states. 🌍💼
Examples:
| Company Formed in | Country | Pay Corporation Tax in | Pay VAT in |
|---|---|---|---|
| [Germany LLC Company] | 🇩🇪 Germany | 🇩🇪 Germany | 🇪🇪 Estonia |
| [Poland LLC Company] | 🇵🇱 Poland | 🇵🇱 Poland | 🇪🇪 Estonia |
| [France LLC Company] | 🇫🇷 France | 🇫🇷 France | 🇪🇪 Estonia |
| [Spain LLC Company] | 🇪🇸 Spain | 🇪🇸 Spain | 🇪🇪 Estonia |
| [Slovakia LLC Company] | 🇸🇰 Slovakia | 🇸🇰 Slovakia | 🇪🇪 Estonia |
Corporation Tax in Estonia is 0%* or 20%
Estonian and Foreign Persons: An Estonian person is someone whose registered seat or principal place of residence is in Estonia, recognized as a person liable for VAT as per Estonian legislation. Similarly, a foreign person is someone whose registered seat or principal place of residence is in a foreign country, treated as a person liable for VAT under the laws of that country. 🇪🇪🌐
Foreign Taxable Persons Operating in Estonia: Notably, a foreign taxable person with a permanent business establishment in Estonia isn’t automatically considered an Estonian taxable person. If the foreign entity doesn’t engage in taxable transactions through its Estonian establishment, it maintains its foreign taxable person status. 🏢🌐
Cross-Border Transactions: Cross-border transactions involving a foreign person’s permanent establishment registered as a taxable person must be carefully considered. Transactions unrelated to the permanent establishment may not make the foreign person a taxable person in that Member State. In cases where the consumer or recipient is a foreign taxable person registered in both their home country and Estonia, a 0% tax rate may apply, involving a reverse charge and transfer of tax liability to the other Member State. 🌐💸
Understanding these definitions and distinctions is essential for businesses operating in Estonia and dealing with cross-border transactions. Staying informed about VAT regulations helps ensure compliance and smooth business operations. 🚀📚
Want to be VAT registered?
Example 1: Anna’s E-commerce Business
Anna operates an e-commerce store selling handmade jewelry online. She primarily caters to customers within Estonia but has been steadily expanding her customer base across the European Union. Over the past year, Anna’s business has thrived, and her turnover has now reached EUR 45,000. At this point, Anna realizes that she has exceeded the mandatory VAT registration threshold in Estonia. To comply with the tax regulations, Anna decides it’s time to register her Estonian OU company for VAT.
Example 2: Peter’s IT Consultancy
Peter, an IT consultant, recently relocated to Estonia to start his consultancy business as a holding company. He provides services to both Estonian businesses and international clients. Peter’s turnover has been consistently increasing, and he anticipates reaching the mandatory VAT registration threshold soon. Rather than waiting to exceed the threshold, Peter decides to voluntarily register his Estonian OU company for VAT. This proactive approach helps him streamline his tax obligations and prepare for future growth.
In both examples, Anna and Peter recognize the need to register their Estonian OU companies for VAT due to their businesses’ growth and the applicable turnover thresholds. This ensures compliance with Estonian tax regulations and allows them to manage their businesses efficiently.
Questions about Company Liquidation
VAT Registration
- What is VAT registration, and why is it necessary in Estonia?
VAT registration in Estonia is the process by which a business becomes a taxable entity for Value Added Tax purposes. It’s necessary when a business’s turnover exceeds the mandatory threshold or when voluntarily registering to claim input VAT deductions.
- What is the turnover threshold for mandatory VAT registration in Estonia?
The turnover threshold for mandatory VAT registration in Estonia is EUR 40,000 at the beginning of a calendar year.
- Can a business in Estonia voluntarily register for VAT, even if it doesn't reach the mandatory threshold?
Yes, businesses in Estonia can voluntarily register for VAT, even if their turnover hasn’t reached the mandatory threshold. This can be advantageous for businesses looking to claim input VAT deductions or to participate in international trade. Haven’t company yet? Buy shelf company with VAT EE Number with Eesti Consulting.
- How does the VAT registration process work in Estonia?
To register for VAT in Estonia, you typically submit an application to the Estonian Tax and Customs Board. The process involves providing necessary documentation, including a business plan, and awaiting approval.
- Can non-resident businesses register for VAT in Estonia?
Yes, non-resident businesses can register for VAT in Estonia if they have a permanent establishment or a tax representative in Estonia. Additionally, some non-resident businesses can appoint a tax representative approved by the tax authority.
- What is the format of the Estonian VAT number, and how is it structured?
The Estonian VAT number starts with the prefix “EE,” followed by nine digits (e.g., EE123456789). Validate the VAT EE number here
- Are there any penalties for not registering for VAT when required in Estonia?
Failure to register for VAT when required can result in penalties and legal consequences. It’s essential to be aware of the registration thresholds and meet your obligations promptly.
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Do you already have a registered company in Tallinn? 🏢 Are you planning to register a company with VAT since the incorporation date? 📅 Do you wish to register a foreign company for VAT? Please fill in the form and contact our service.
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