Published date: July 7, 2021. 21:03
Provision of services to other Estonian companies and/or individuals will generally be subject to the standard 20% VAT rate. There’s also a reduced 9% VAT rate in use, which applies to the provision of accommodation services and to the sale of books, certain periodicals, pharmaceutical products and medical devices. If, however, you provide services to customers in other EU Member States or third countries, then a 0% VAT rate is generally applied.
If you issue invoices to corporate customers (business-to-business or B2B transactions) in other EU Member States or third countries, you should include a VAT registration number for the customer and a reference to “reverse charge mechanism”, meaning that you apply 0% VAT and the customer applies and reports VAT by self-assessment in the Member State that issued the VAT identification number. The situation becomes a little more complex when your customers are final consumers (business- to-consumer or B2C transactions) in other EU Member States or third countries. If services are provided to final consumers outside Estonia, these would be subject to Estonian VAT, unless an exception based on the nature of the service applies. In the latter case there may be an obligation to register your company for VAT in the country where the final consumers are located and to comply with local VAT rules. Also, keep in mind that there are rules depending on the type of service that is performed, which determines where a certain service should be subject to VAT.
The taxable period for VAT is one month, and you must declare and pay VAT to the tax authority by the 20th day of the following month. You can file VAT tax returns using the e-Tax/e-Customs online environment: VAT declarations on form KMD and an Annex KMD INF listing all sales and purchase invoices with domestic counterparties exceeding EUR 1,000 in one month must be declared on form KMD INF. Supplies of services to VAT-registered customers of other EU Member States must also be declared in the monthly EC sales list due by the 20th of the following month.