ESTONIA: COVID-19 VAT IMPLICATIONS

ESTONIA – Update 7th May

VAT Exemption for Protective Equipment, Medical Devices for Coronavirus

Personal protective equipment and other medical equipment (so-called crisis goods) used to prevent and stop the spreading of COVID-19 virus shall be provisionally exempted from the customs duty and VAT. This ensures similar conditions for all types of transactions (import of goods, intra-Community acquisitions, domestic sales). Provisional means that the right to use the 0% rate is linked to a decision made by the European Commission.

The import of crisis goods is exempt from customs duties and import VAT on the basis of the decision of the European Commission on 3.04.2020, which determines the exemption period from 30.01 to 31.07.2020 (could be extended if necessary). Neither the legislation of the European Union or Estonia provides an exhaustive list of goods subject to the exemption, but there is an indicative list used by Estonia in granting it. The exemption is not automatic, but is granted by a decision of the Tax and Customs Board upon the submission of the customs declaration.

 Intra-community purchase is tax exempt if import of the same goods is tax exempt.

The 0% VAT rate makes it possible to sell the crisis goods (such as protective masks) imported by an Estonian company, without adding VAT, to the hospital (as an entitled person).

The Ministry of Finance has prepared a guidelines for customs and VAT-free imports (only in Estonian).

Source Credit – Bloombergtax

ESTONIA – Update 24th April

Extension of the scope of the reduced 9% VAT rate

 Estonia has published in the Official Gazette the Law of 15 April 2020, which amends various other laws for the implementation of supplementary budget measures related to the COVID-19 crisis. Some of the main tax-related measures include the following:

• The extension of the scope of the reduced 9% VAT rate with effect from 1 May 2020 to include electronic books and study literature and press publications, unless containing mainly advertising or mainly erotic or pornographic content or video or music content;
• The suspension of the obligation to calculate and pay interest on outstanding tax debts from 12 March 2020 until the end of the state of emergency;
• A reduction in the interest rate for outstanding tax debts from 0.06% per day to 0.03% per day from the end of the state of emergency until 31 December 2021;
• With respect to the deferral of the payment of tax debts, the tax authority is allowed to reduce the interest rate for deferral (by up to 100%) from 1 May 2020 to 31 December 2021;
• An exemption from the payment of waterway charges is provided from 1 April 2020 to 31 March 2021 for all ships entering an Estonia port or port roadstead, with adjusted rates provided from 1 April to 31 December 2021;
• An exemption from the payment of social tax is provided for the months of March, April, and May 2020; and
• An exemption from income tax is provided on gifts or donations made by a legal person to a state or local government agency, welfare institutions, or hospital operator in Estonia for charitable purposes from 12 March to 1 July 2020.

The law also includes various other measures, including adjustments in fuel and electricity excise duty rates, measures regarding pensions, and several funding-related measures.

Source Credit – Orbitax

ESTONIA – Update 17th April

Businesses are expected to meet the VAT return deadline on 20th March 2020, however the tax authority will show flexibility on collecting VAT debts. The Ministry of Finance is preparing to borrow up to EUR 1 Billion to boost business in a state of crisis due to the spread of Covid-19 and to mitigate the effects of the crisis.

Source Credit – Accordance VAT

ESTONIA – Update 17th April

Guide on VAT Exemption for Protective Equipment, Medical Devices for Coronavirus

The Estonian Tax and Customs Board issued a VAT guide on the exemption for personal protective equipment and medical devices on 9th April, due to the coronavirus pandemic. The guide explains 1) the types of imported goods and eligible for exemption; 2) the exemption period; 3) a list of exempted goods under EU guidance; and 4) the exemption application procedure.

Source Credit – Bloomberg Tax

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