How VAT is applied in Estonia and the EU


 

If the company has no VAT ID

It is allowed to sell goods and/or services in Estonia or in the EU without VAT, as long as total annual sales does not exceed 40 000 EUR.


Sales inside Estonia or to EU clients without a 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 40 000 EUR/year. Whenever sales have exceeded 40 000 EUR, 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 or services are made to companies (with VAT ID) outside of Estonia, the Estonian company does need a VAT ID even if sales exceed 40 000 EUR for the following 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 the 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.