If you’re registered as a VAT payer in Estonia—or planning to be—there are a few essential rules and deadlines you should know.

Whether you’re an Estonian business or a foreign company doing business in Estonia, understanding your responsibilities helps you avoid costly mistakes and ensures compliance with the Estonian Value-Added Tax Act (KMS).

Let’s walk through the key obligations and rights of VAT payers in Estonia.

What Happens After VAT Registration?

From the day you are registered as a VAT payer in Estonia, you are required to:

• Add VAT to your sales – When you sell goods or services that are subject to VAT, you must add the applicable VAT rate to the sale price.
• Calculate payable VAT – You must determine how much VAT you owe to the tax authorities according to the rules in Section 29 of the VAT Act.
• Pay VAT on time – The tax must be paid following the procedures in Section 38 of the Act.
• Keep records and documents – Maintain all required records in accordance with Section 36.
• Issue invoices – Invoices must meet the formal requirements set out in Section 37.

These obligations also apply to foreign entities registered as VAT payers in Estonia, except in limited cases (e.g., if they don’t have a permanent establishment in Estonia and the reverse charge mechanism applies).

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The Right to Deduct Input VAT

VAT payers can reduce their VAT liability by deducting input VAT. This means you can reclaim the VAT you paid on goods and services used for your taxable business activities.

🧾 Important:

• Input VAT cannot be deducted if the goods or services are used for VAT-exempt activities or personal/non-business purposes.
• All deductible input VAT must relate directly to taxable supplies made during the same VAT period.

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Monthly VAT Calendar: Deadlines You Must Follow

Here are the regular deadlines every VAT payer in Estonia should keep in mind:

Date	Obligation	Who Must File
10th of each month	Submit TSD form (Income & social tax, unemployment insurance, and funded pension contributions)	VAT payers with employees or payroll obligations
20th of each month	Submit VAT return (Form KMD) and KMD INF (domestic sales & purchases over €1000)	All VAT-registered persons
20th of each month	Pay VAT owed for the previous period	All VAT-registered persons
20th of each month	Submit intra-community supply report (Form VD)	VAT payers who sell goods/services to other EU VAT payers

⏰ If the due date falls on a public holiday or weekend, the deadline is extended to the next working day.

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The €40,000 Threshold (Effective January 1, 2025)

You must register for VAT in Estonia once your taxable turnover in Estonia exceeds €40,000 over a calendar year. This threshold includes:

• Sales of goods and services subject to VAT, including those taxed at 0% (excluding sale of fixed assets)
• Certain real estate and financial transactions (with some exceptions)
• Only sales where Estonia is the place of supply are considered

If your turnover is made up entirely of VAT-exempt sales or 0%-rated sales (excluding intra-community sales), VAT registration is not required, regardless of turnover size.

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Foreign Businesses Without a Permanent Establishment in Estonia

A foreign business without a permanent establishment in Estonia must register for VAT immediately if:

• They provide taxable goods or services in Estonia, and
• The transaction is not subject to reverse charge (i.e., the buyer is not a VAT payer in Estonia)

📌 Example:

• If a UK-based consultant provides services to an Estonian private individual (not VAT-registered), they must register for VAT in Estonia and charge local VAT.
• If that same consultant works with an Estonian company that is VAT-registered, no registration is required—because the Estonian business self-accounts for the VAT (reverse charge).

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When Is VAT Registration Not Required?

You are not required to register for VAT in Estonia if:

• Your only taxable sales in Estonia are taxed at 0% (excluding intra-community supply or online marketplace sales where special rules apply), or
• You only sell to Estonian VAT payers who handle VAT through reverse charge

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Final Thoughts

Navigating VAT obligations in Estonia doesn’t have to be overwhelming. Whether you’re a local entrepreneur or a foreign service provider, staying informed helps you manage taxes efficiently and avoid penalties.

Need help registering for VAT or handling your tax filings? We’re here to assist.

📩 Contact us at virtualofficeinestonia.com for professional support with VAT compliance, company formation, and ongoing business services in Estonia.