Company in Estonia
 

How to get VAT ID for an Estonian company


 

General requirements

If the company sales in EU exceeds 16 000 EUR (40 000 EUR from 1 January 2018), then the company must apply for VAT ID.

In case you want to apply VAT ID before you have started business or 16 000 EUR limit is exceeded, it is required to explain planned business activities.

It is important to know that VAT ID is not granted always automatically and further investigation might be held by tax authorities. Giving sufficient supporting explanations and evidence usually helps to avoid further questions from tax authorities and related time.

Authorities usually make the decision in 1 week.


Tax returns become compulsory

Once your company has been granted a VAT ID, you must submit monthly tax returns, even if your company does not have any activities at all.

Monthly tax reports are:

  • Income tax return - latest on the 10th day of the next month
  • VAT return - latest on the 20th day of the next month 

In case you fail to submit the tax returns on time, your company might get a penalty from tax authorities and may lose the VAT ID.

 

 
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How VAT is applied in Estonia and the EU


 

If company has no VAT ID

It is allowed to sell goods and/or services in Estonia or in EU without VAT as long as total annual sales does not exceed 16 000 EUR (40 000 EUR from 1 January 2018).


Sales inside Estonia or to EU clients without VAT ID

It is virtually impossible to buy and sell goods without a VAT ID. But if a company has a VAT ID, all EU sales to companies will be with 0% VAT (if the buyer has a VAT ID) and all purchases will also have 0% VAT.


Intra-community sales of goods

As long as a company has no VAT ID it can sell without VAT for up to 16 000 EUR/year. Whenever sales have exceeded 16 000 EUR/year (40 000 EUR from 1 January 2018), the company must apply for a VAT ID and start to pay VAT from sales with 20% or 9% VAT.  A VAT ID makes it possible to get VAT refunds from purchases.  As long as a company has no VAT ID it cannot get VAT refunds.


Intra-community sales of services

According to Estonian law, if sales of services are made to companies (with VAT ID) outside of Estonia, the Estonian company does need a VAT ID even if sales exceed 16 000 EUR/year (40 000 EUR from 1 January 2018)for next list of services:

  1.  grant of the use of intellectual property or transfer of the right to use intellectual property;
  2.  advertising services;
  3.  services of consultants, accountants, lawyers, auditors and engineers, translation services, as well as data processing or the supplying of information;
  4. financial services, except for leasing safes, or insurance services, including reinsurance and insurance intermediation services;
  5. allowing use of manpower;
  6. the hiring or leasing of or establishment of a usufruct on movables, except means of transport;
  7. electronic communications services, including assignment of rights to use transmission lines;
  8. electronically supplied services;
  9. allowing access to natural gas or electricity, heating and cooling energy network connections, and transmission of natural gas or electricity, heating or cooling energy through networks and services directly related thereto;
  10. transfer of permitted limit values of emissions of greenhouse gases regulated by the Ambient Air Protection Act;
  11. refraining from the services specified in clauses 1)-10) of this subsection, waiving the exercise of a right or tolerating a situation for a charge.

Sales and purchases outside EU.

If a company does business only outside of the EU there is no need for VAT ID at all. However, if there are costs made in the EU, it might be reasonable to acquire a VAT ID to get VAT refunds from EU costs.


 
 
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