Expanded accounting

An invoice is a primary accounting document.

The document must clearly identify the parties, the date, and the economic substance of the transaction, otherwis,e it is not accepted as a valid source document. E-invoices are fully acceptable as long as integrity and authenticity are guaranteed. Adding extras such as the payment reference or due-date is not compulsory, but it helps cash-flow management. Only a VAT-registered business may add VAT to its invoice.

• Document title (e.g. “Invoice”)

• Unique invoice number and date of issue

• Seller’s and buyer’s name, address, registry code, VAT ID (if any)

• Description of goods/services, quantity, unit price, VAT rate, net and gross amount

• Date of delivery/performance if different from the invoice date

2. Language of source documents

• Invoices may be issued in Estonian or English.

• Documents in any other language must be accompanied by a sworn translation into Estonian or English to be accepted by auditors or the Tax and Customs Board (MTA).

3. Proving the business purpose

Under both the Accounting Act and the Income Tax Act, an expense is deductible only if it is business‑related and substantiated.
If the invoice alone does not make the business purpose evident (e.g. taxi, parking, travel tickets), add explanatory information such as:

• project or client name;

• employee name & business trip dates;

• licence plate number of the company car, etc.

Lacking or incomplete documentation may lead to the expense being treated as a non‑business cost, subject to fringe‑benefit or dividend tax.

This guide is for general information only and does not constitute legal advice. For complex situations consult a professional accountant or tax adviser.