Should you be considering expanding your business to Estonia, you might need some guidance with your taxes from local experts. BDO tax and accounting teams in Estonia are there to help you!
The following steps should be done for that:
- Submitting an application for registration as a non-resident taxpayer;
- Submitting an application for registration as VAT liable person
- Submitting an application for using (for submitting VAT returns) the Tax and Customs Board’s electronic database (for submitting VAT returns)
For performing all the mentioned steps, a power of attorney (POA) is needed. This is usually prepared by BDO and the client needs to notarise it.
The tax authority usually registers a person as a taxable person within five working days as of the receipt of the application.
In order to be registered, the person shall furnish proof of the fact that the person is engaged in business in Estonia or is about to commence business in Estonia. If the proof provided concerning the person’s business or commencement of business is insufficient, the tax authority shall have the right to request that the person submit additional proof or collect such proof on its own initiative. The tax authority shall decide on registration within 5 working days as of the receipt of the proof. If the Tax Board asks for additional proof then the registration process takes in practice 1-2 weeks.
If the person has no longer supply of transactions subject to value added tax in Estonia, the person may submit an application to the tax authority for deletion of the person from the VAT register. Before deciding on the deletion of a taxable person from the register, the tax authority shall, if necessary, audit the economic activities of the person.
For submitting the application for deletion on behalf of the client, POA is needed.
BDO helps you with preparation and submission of VAT returns, EC Sales Lists and Intrastats in Estonia
The following steps should be done for that:
- Sign the agreement with BDO Eesti
- Send the necessary data which should be declared on the forms
- Wait for the response from BDO confirming that VAT declarations are submitted
- If needed, ask the necessary VAT consultancy
Important facts about the VAT in Estonia
Standard VAT Rate: 20%
Reduced VAT Rate: 9% applies to books and workbooks used as learning materials, particular medicinal products, particular periodic publications, accommodation services or accommodation services with breakfast.
EU VAT number format: EE and 9 digits
Registration Threshold: Resident – EUR 16,000
Registration Threshold Distance Selling: EUR 35,000
Estonia being an EU member state falls under the EU VAT regime.
The reverse charge is widely imposed on taxable transaction, which means that whenever the place of supply is Estonia and the receiver of the goods or services is a taxable person with an Estonian VAT number, no obligation for registration arises for the non-resident supplier. If the purchaser is not a VAT liable in Estonia, registration obligation arises for the provider of goods or services. The registration obligation shall arise for the foreign taxable person as of the date on which the taxable supply is created. However, if zero-rated supplies are made in a free zone, free warehouse or in a customs warehouse, the person making the supplies is exempted from registration.
If a taxable person of another Member State is engaged in distance selling to a person of Estonia (excluding distance selling of excise goods) and the taxable value of the supply of the distance selling exceeds EUR 35 000 as calculated from the beginning of a calendar year, the registration obligation shall arise for the person as of the date on which the supply reaches the specified amount.
If a taxable person of another Member State is engaged in the distance selling of excise goods to a natural person of Estonia for personal use, the registration obligation shall arise for the taxable person as of the date on which the supply of the distance selling of excise goods is created.
VAT Taxable period
The taxable period is one calendar month. Value added tax returns shall be submitted to the tax authority by the 20th day of the month following the taxable period. A taxable person shall pay the amount of value added tax due by the date of submission of the value added tax return. All tax returns should be submitted electronically through the e-Tax Board/e-Customs portal.
Intrastat
The Intrastat discloses details of movements of goods between Member States which take place for commercial reasons, recording the movement whenever goods enter the territory of Estonia from other Member States or leave it to other Member States.
In 2016, the statistical threshold for the dispatches of goods is EUR 130,000 and the statistical threshold for the arrivals of goods is EUR 200,000.
Declaration must be filed monthly once the annual threshold is exceeded. The due date for submission is 14th of the month following the calendar month to which the declaration relates. E.g. for the January period, declaration must be submitted by the 14th of February.
Should you have any queries on the matter, you are welcome to contact experts from BDO Estonia!