How to manage VAT issues of Estonian company?

Managing VAT (Value Added Tax) for an Estonian company depends on your company’s activities, turnover, and whether you sell goods or services inside or outside the EU. Here’s a structured breakdown:

1. When to Register for VAT

• Threshold in Estonia: If your company’s taxable turnover in Estonia exceeds 40,000 EUR per calendar year, you must register for VAT.
• Voluntary registration: You can also register earlier if you deal with EU partners or want to reclaim input VAT.
• Non-EU trading: If selling digital services to EU consumers (B2C), VAT registration (or OSS scheme) may be required regardless of turnover.

2. VAT Rates in Estonia

• Standard rate: 24% (since July 2025).
• Reduced rates: 9% (books, accommodation, certain medicines, press).
• 0% (zero-rated): Exports outside the EU, certain intra-EU supplies, international transport, etc.

3. VAT Returns & Deadlines

• Declaration frequency: Usually monthly (by the 20th day of the following month).
• Reports are submitted to the Estonian Tax and Customs Board (ETCB) online, using your e-Residency ID.
• Even if there is no VAT activity in a month, you still file a “nil” declaration if registered.

4. Cross-Border Sales

• B2B inside EU: Reverse-charge mechanism often applies (you issue invoice without VAT, customer accounts for VAT in their country).
• B2C inside EU: You may need to use the OSS (One-Stop-Shop) system to declare VAT in multiple EU countries with one return.
• Exports outside EU: Usually 0% VAT, but you must keep proof of export.

5. Bookkeeping & Invoicing Rules

• VAT invoices must include: company details, VAT number, invoice number, date, description, net price, VAT rate, and total.
• All documents must be kept 7 years.
• Accounting must follow Estonian Accounting Act requirements.

6. Common Pitfalls

• Forgetting to register once threshold is exceeded.
• Incorrectly applying VAT rules for digital services or intra-EU sales.
• Missing monthly filing deadlines (can result in fines).

7. Practical Tips

• Use an Estonian accountant or e-Residency service provider (like Maxwise OÜ: Expert
  Accounting and Tax Assistant – MAXWISE) — they handle VAT registration, declarations, and compliance.
• Consider voluntary VAT registration early if you have EU suppliers (so you can reclaim input VAT).
• Always double-check VAT rules when selling to consumers in multiple EU countries (OSS can simplify reporting).