VAT Registration in Estonia
When an individual becomes obligated to register as a taxable person, they must submit an application for registration to the tax authority within three working days. Both digital and written applications are accepted, and the person submitting the application must provide identification and, if necessary, proof of their authority to represent the applicant.
In Estonia, a VAT Identification number is given after each registration. It is comprised of the country code “EE” as the prefix followed by nine (9) digits, i.e., EE123456789.
Register for VAT in Estonia
Taxable Persons
Section 3 of the Estonian VAT Act, a taxable person is an individual or entity, including legal persons in public law or government authorities, who is engaged in business and is either registered or required to be registered as a taxable person. The term “person” includes both natural persons and legal persons, as well as state, rural municipality, or city authorities.
Established Entities
The Estonian Tax Authorities have established a registration threshold for both resident and non-resident entities operating in Estonia. For established companies, the VAT registration threshold is set at EUR 40,000 within the calendar year. It is important to note that the counting of the threshold should commence from the first monthly report of the calendar year. Once this threshold is surpassed, established entities are required to submit their application within three days.
Regarding Limited Liability Registration for Intra-Community Acquisitions, Section 4 of the Estonian VAT Act states that taxable persons must register if the taxable value of goods acquired through Intra-Community Acquisitions exceeds the threshold of EUR 10,000.
Foreign Entities
The Estonian VAT Act does not specifically mention a VAT registration threshold for non-established entities. However, if a non-established business solely deals with zero-rated supplies or exempt intra-community transactions, it is exempt from the requirement of registering for Estonian VAT.
Selling in Estonia?
Registration exemptions in Estonia
Mandatory Registration
A foreign person without a permanent establishment in Estonia must register for VAT if they make a taxable supply in Estonia that is not subject to the reverse charge mechanism. There is no registration threshold for such persons. However, different rules apply to transfers of fixed assets, distance sales, and e-commerce. If a foreign person carries out only zero-rated supplies (excluding intra-Community supplies of goods or services) in Estonia, such as supplying goods through the free zone or a customs warehouse in Estonia, then they are not required to register for VAT in Estonia.
Voluntary Registration
Estonian VAT Act also provides an option for businesses to voluntarily register even without the registration obligations. To be registered, the entity who voluntarily registers must provide a proof of business activity in Estonia or about to commence business in Estonia.
Exemptions from Registration
A person is not obligated to register for VAT if all of their taxable supplies are supplies that are subject to zero rate, with the exception of intra-Community supplies of goods and certain services that are subject to the reverse charge.
Group and Divisional Registration
The VAT Act’s Section 26 allows for the registration of a parent company and its subsidiaries as a single taxable entity, known as a VAT group. Furthermore, economically and organizationally related taxable entities may also be registered as a VAT group if they meet certain criteria. Specifically, if one person owns more than 50% of the shares or voting rights in each company, or if they are related through a franchise agreement, they may qualify for VAT group registration. It is important to note that only taxable persons operating in Estonia and engaged in business activities within the country are eligible for VAT group registration.
Group Registration means that:
- The group will be registered under one “representative member”.
- The representative will be responsible for the completion and submission of the single group VAT return.
- All members of the group are liable for any VAT obligations.
Registration Procedures
With or without the obligation to register, the registration application can be submitted to the Estonian Tax and Customs Board via email or paper.
Non-established businesses must apply for VAT registration in person. Applications submitted via email, post, fax, or through the e-Tax/e-Customs Board will not be considered valid. However, an authorized person can act on behalf of the taxable person, provided they can provide proof of authorization, which can be in the form of a digitally signed document or a document verified by a notary and apostilled.
The status of being a taxable person is conferred upon an individual once the tax authority enters the relevant data in the register of taxable persons. This registration process typically takes up to five working days from the date of receiving the application.
VAT Representatives
Non-EU entities residing in countries that lack an agreement with the EU on combating VAT fraud and do not have a permanent establishment in Estonia must appoint a tax representative. However, an exception to this rule exists if the non-EU business chooses to use the “One Stop Shop” (OSS) scheme, with the exception of the Import One Stop Shop, which necessitates the appointment of an EU-established representative.
New Regulation July 2021
Starting on July 2021, new guidelines were put into effect. Country-specific VAT thresholds were removed in favour of an EU-wide distance selling threshold of EUR 10,000. All distance selling revenues not exceeding this new threshold will still be subject to VAT in the country of origin or the home country of the business. All those which exceed will be subject to tax in the countries where the goods and services are delivered.
Last Updated: 30/10/2023
Disclaimer
The information provided by Global VAT Compliance B.V. on this webpage is intended for general informational purposes only. Global VAT Compliance B.V. is not responsible for the accuracy of the information on these pages, and cannot be held liable for claims or losses deriving from the use of this information. If you wish to receive VAT related information please contact our experts at support@gvc.tax
