Registration of VAT payers in Estonia

Need support to register VAT in Estonia? -Click here. In Estonia, most of the goods and services are subject to Value Added Tax (VAT). The VAT registration threshold for local entrepreneurs is EUR 16,000 in a calendar year. The time necessary for completing the registration after submitting all documents is 3 working days; foreign entrepreneurs must complete their VAT registration before conducting taxable transactions.

Expanding a market share in Estonia allows to expand further also towards the Scandinavian countries. The taxation system of Estonia is favourable to development of enterprises, because the refinanced and retained profit is not subject to the corporate income tax.

Most of the undertakings in Estonia are private limited companies (osaühing – OÜ). Generally, there are 5 following types of undertakings in Estonia:

1. private limited companies (osaühing – OÜ);
2. public limited companies (aktsiaselts – AS);
3. general partnerships (täisühing – TÜ);
4. limited partnerships (usaldusühing – UÜ);
5. sole proprietorships (füüsilisest isikust ettevõtja – FIE).

Foreign entrepreneurs must register as VAT payers in the following cases:

• if a merchant does not conduct regular business in Estonia and pays taxes in another country; and if a merchant conducts business also in Estonia among others, but is not registered as a VAT payer;
• if a merchant is registered as a VAT payer in another EU Member State and is engaged in distance selling (excluding distance selling of excise goods) to a person in Estonia not registered as a VAT payer and the taxable value of the supply of the distance selling exceeds EUR 35,000 as calculated from the beginning of a calendar year;
• if a merchant registered as a VAT payer in another EU Member State is engaged in the distance selling of excise goods to a natural person in Estonia for personal use.

If a merchant registered as a VAT payer in another EU Member State is engaged in distance selling of goods (excluding distance selling of excise goods) in Estonia, it may register as a VAT payer on a voluntary basis. It must be noted that the tax authority is entitled to remove a tax payer from the register if this tax payer has not submitted a VAT declaration regarding the last six months.

If you're interested in VAT registration services in Estonia read more on Company registration in Estonia