Estonian VAT went up twice in eighteen months, and the reduced rates moved too. If you are reading a guide written before mid-2025, every rate in it is wrong.
24%, since 1 July 2025
The standard rate of käibemaks is 24%. It was 20% until the end of 2023, 22% through to June 2025, and 24% from 1 July 2025.
Registration is compulsory once taxable supply passes €40,000 in a calendar year. A foreign business with no permanent establishment in Estonia has no threshold at all and may register voluntarily.
Everything is filed monthly, on the 20th — the return, the annex and the payment share one date.
Table of Contents
The Rates
| Rate | Applies to | Changed |
|---|---|---|
| 24% | Standard — most goods and services | 1 July 2025, from 22% |
| 13% | Accommodation | 1 January 2025, from 9% |
| 9% | Publications and press; medicines | 1 January 2025, from 5% for press |
| 0% | Exports and intra-EU supplies | — |
Standard rate 20% → 22%
The first of three moves. Any guide written before this is wrong about every rate on this page.
Reduced rates move
Accommodation 9% → 13%. Publications and press 5% → 9%. The registration threshold also switched to a calendar-year basis.
Standard rate 22% → 24%
The current rate, and the one most published guidance still has wrong.
Three rate changes in eighteen months
Standard VAT went 20% → 22% on 1 January 2024, then 22% → 24% on 1 July 2025. Accommodation went 9% → 13% and press 5% → 9%, both on 1 January 2025. A guide that predates July 2025 is wrong about the headline rate, and one that predates 2025 is wrong about all of them.
Adding and Removing VAT
VAT is computed on the taxable value — the sales price plus anything else treated as consideration. So it goes on top of the net price.
| Rate | Net → gross | Gross → net | Extract the VAT from a gross figure |
|---|---|---|---|
| 24% | × 1.24 | ÷ 1.24 | × 24 ÷ 124 |
| 13% | × 1.13 | ÷ 1.13 | × 13 ÷ 113 |
| 9% | × 1.09 | ÷ 1.09 | × 9 ÷ 109 |
On €1,000 net at 24%, the VAT is €240 and the invoice total is €1,240. Working backwards from a €1,240 gross figure: €1,240 × 24 ÷ 124 = €240 of VAT and €1,000 net.
The commonest error in this area is taking 24% of the gross rather than extracting it from the gross. On that same invoice, €1,240 × 0.24 is €297.60 — €57.60 more VAT than is actually due. The number you want is €1,240 × 24 ÷ 124.
Use the VAT calculator rather than doing it by hand.
When You Must Register
The threshold is €40,000 of taxable supply from the start of the calendar year. Note calendar year, not a rolling twelve months — the calculation principles changed on 1 January 2025.
Compulsory registration is backdated. Voluntary registration is not.
This asymmetry is the one that costs money. If you cross €40,000 and register late, EMTA registers you retroactively from the day you crossed it — and you owe VAT on everything supplied since, whether or not you charged it to your customers. Voluntary registration, by contrast, takes effect from the day EMTA receives the application, or a later date you ask for. It is never backdated to help you.
A foreign person with no permanent establishment in Estonia has no threshold. There is no €40,000 grace period; the obligation is different in kind. Registration duty arises on the date taxable supply is created.
Registering Voluntarily
You can register before you reach the threshold, and for a business selling B2B it is often the right move — you cannot reclaim input VAT until you are registered.
But it is not automatic. You have to prove to EMTA that business is under way or planned, and the Estonian-language page names the acceptable evidence explicitly where the English one only gestures at it:
What EMTA accepts as evidence
Named on the Estonian page:
- A business plan
- Preliminary contracts
- Lease, procurement, supply or works contracts
- The objects of the work to be done
What follows
The mechanics:
- EMTA has 5 working days — counted from receiving the evidence, not the application
- Effective from the date of receipt, or a later date you name
- It can be refused if you neither carry on business nor are starting one
That five-day clock is worth reading twice. Filing an application without the evidence does not start it.
Cross-Border Supply and the Reverse Charge
This is the section that matters most to an e-resident company, and the one most often described as a loophole when it is nothing of the kind.
Services
The general B2B rule puts the supply in the customer's country. The place of supply is not Estonia, so you apply 0% and charge no Estonian VAT — and the customer accounts for it under the reverse charge. For a non-taxable customer, the supply stays in the supplier's country and you charge Estonian VAT.
| You sell a service to | Estonian VAT? | On the invoice | On the VD report? |
|---|---|---|---|
| A VAT-registered business in another EU state | No — 0% | "Reverse charge" | Yes |
| A business outside the EU | No — 0% | Place of supply outside Estonia | No |
| A consumer anywhere | Yes, normally | Ordinary invoice | No |
| An Estonian customer of any kind | Yes | Ordinary invoice | No |
The words "Reverse charge" must appear on the invoice for an intra-EU B2B service. Not "VAT 0%", not "exempt" — the notation is prescribed.
Goods
Intra-Community supply of goods is zero-rated only if the seller is certain the buyer is VAT-registered in another member state, and both VAT numbers appear on the invoice. You must also hold the delivery notes and documents proving the goods physically moved.
EMTA points sellers at the European Commission's VIES tool to check a counterparty's VAT number.
Selling to consumers across the EU
A single EU-wide threshold of €10,000 applies to intra-Community distance selling of goods. Below it you may charge your own country's rate. Above it, the OSS scheme lets you declare the VAT due in every member state on one return, joined by application in e-MTA.
The Cross-Border Small Business Scheme
In force since 1 January 2025, this lets a small business trade in other member states without registering for VAT in each of them, on the same terms as a local small business there.
File a prior notification (eelteade)
Through EMTA's electronic portal, naming the member states you intend to operate in.The other member states confirm
They check you against their own small-business rules.EMTA issues a number with the suffix EX
A separate identifier from your ordinary KMKR number — do not use one where the other belongs.Report turnover quarterly
By the end of the month following each quarter.
Exemption is not zero-rating, and the difference is your input VAT
Under this scheme you cannot deduct input VAT on the costs of operating in the other member state. A zero-rated supply preserves the right to deduct; an exempt one does not. For a business with meaningful costs abroad, the scheme can be worse than registering.
Exceed the ceiling and the scheme suspends: you must register in the country of activity, or use OSS.
This scheme is documented in Estonian only
EMTA publishes nine pages on it under Erisätted ja kinnisasja maksustamine, including a FAQ, a guide to computing the annual turnover, and a PDF walkthrough. Its English site mentions the scheme in a single clause on one page. Its Russian site does not mention it at all — the Russian hub for special provisions lists no small-enterprise sub-page.
That is the largest language gap we have found in EMTA's estate. If you are running an Estonian company in English or Russian and this scheme applies to you, you would have no way of knowing it exists. Everything in this section comes from the Estonian pages.
Reclaiming Input VAT
The right of deduction covers input VAT on goods and services used for your own taxable supply. Nothing bought for exempt supply is deductible.
What is restricted
| Cost | Deductible? |
|---|---|
| Receiving guests | No |
| Meals or accommodation for employees | No — except accommodation on a business trip |
| A passenger car, and costs related to it | 50% — see below |
| Everything else used for taxable supply | Yes, in full |
Restaurant and hotel invoices are EMTA's own examples of the guest-and-employee restriction. It bites only where the purpose is clear when the cost is incurred — VAT deducted first and then put to a restricted use is corrected as self-supply rather than disallowed retrospectively.
The car rule, which is Estonia's distinctive one
A passenger car here means a category M1 vehicle of not more than 3,500 kg with at most 8 seats besides the driver's. On one of those, only 50% of the input VAT — on the car and on its running costs — is deductible.
100% is available only in narrow cases: cars bought to sell or to rent out, cars used mainly for carriage of passengers for a charge or for driving instruction, or cars used exclusively for business.
The lock-in nobody mentions
Once a car starts being used for non-business purposes, the 50% cap on running-cost input VAT applies for a year from the month that use begins. One personal trip in January costs you half your input VAT on fuel and servicing until the following January. If you are claiming 100% on a company car, the discipline required is total.
EMTA's English page hedges the car rule; its Russian page does not
The English page says input VAT is "usually 50%" deductible. The Russian page states it flat, in one line, with no hedge. Both were read on 20 August 2026. We have published the 50% figure with the exceptions listed, because the exceptions are what the "usually" is doing — but if an adviser tells you the rule is absolute, they may simply be reading the Russian page.
Mixed use, and getting the money back
Where business and non-business use cannot be separated in the accounts, the method of deduction is fixed by a decision of the head of the tax authority, on your own request, based on actual use. It is not a percentage the business picks for itself.
And an input-VAT excess is not paid out automatically. It sits as a credit on your prepayment account in e-MTA, and a digitally signed refund application has to be filed to get it out. Once the decision is confirmed, EMTA transfers within up to 3 working days.
Invoicing and Filing
What must be on a VAT invoice
There are 10 required particulars. Two of them are where invoices actually fail:
The taxable amount must be broken down by rate, with the rate shown, or the exempt amount stated. A single "total including VAT" line is not compliant, however clear it looks.
The customer's VAT number goes on when the customer has the tax liability — which is exactly the reverse-charge case.
When it must be issued
| Supply | Deadline to issue |
|---|---|
| Ordinary | 7 calendar days from dispatch, availability, or provision of the service |
| Intra-Community, and cross-border services | The 15th of the month after dispatch |
| To a natural person for personal use | No § 37 invoice required |
The 20th of the month
One date, three obligations
The KMD return, the VD intra-Community report and the payment are all due on the 20th of the month following the taxable period. There is no separate payment deadline to remember, and no quarterly option — Estonian VAT is monthly.
The KMD INF annex is filed monthly alongside the return. Invoices must be itemised where the VAT-exclusive total per transaction partner is at least €1,000 — part A for sales, part B for purchases. That threshold is per partner across the period, not per invoice, which is the part that catches people running many small invoices to one client.
File in e-MTA, through accounting software over X-tee, or at a service bureau.
Being late
Late VAT carries interest at 0.06% a day — which EMTA itself converts to 21.9% a year. It runs from the day after the due date, so it starts on the 21st, not from an assessment landing months later.
VAT for an e-Resident Company
An Estonian OÜ founded through e-Residency is an ordinary Estonian company for VAT purposes. If it makes taxable supplies in Estonia above €40,000 in a calendar year, it registers like any other.
Most e-resident companies sell services to business customers elsewhere in the EU, where the reverse charge applies — the customer accounts for the VAT and you charge none. That is why many e-resident businesses never register.
It is not an exemption. It is the place-of-supply rules working normally, and it stops applying the moment you sell to Estonian customers or to consumers anywhere. Two consequences follow that catch e-resident founders out:
Selling to consumers changes everything. A B2C sale is supplied where you are, so Estonian VAT applies and the threshold starts counting. A business built on B2B invoices that adds a consumer product has a registration obligation it did not have last quarter.
Not registering means not reclaiming. Every euro of Estonian VAT on your costs — software, accounting, equipment — is a cost rather than a credit until you register. For a company with real Estonian expenses, voluntary registration is usually worth the filing.
Getting Out
You apply to EMTA, showing that Estonian-place-of-supply turnover has not exceeded €40,000 in the current or previous calendar year.
Three things about deregistration are not obvious:
Deletion is not clean. On deletion you pay VAT on goods you still hold and whose input VAT you deducted when you acquired them. Stock and equipment carry a bill on the way out.
It takes effect on the date in EMTA's decision, not the date you applied.
There is a minimum period, but only for some. A person operating from another EU member state must have been registered at least 2 calendar years before applying to be deleted. There is no general minimum for an Estonian business.
EMTA can also strike you off on its own initiative if you have filed no VAT returns for 6 consecutive taxable periods — six months of silence.
Common Mistakes
Taking 24% of the gross figure
That is €297.60 on a €1,240 invoice instead of €240. To extract VAT from a gross amount, multiply by 24 and divide by 124.
Registering late after crossing the threshold
Compulsory registration is backdated to the day you crossed it. You owe the VAT on everything since, whether or not you charged it.
Filing a voluntary application with no evidence
EMTA's 5 working days run from receiving the evidence of business activity, not the application. No evidence, no clock.
Writing "VAT 0%" instead of "Reverse charge"
The notation is prescribed for intra-EU B2B services. It is one of the 10 required particulars, not a stylistic choice.
A single total-including-VAT line
The taxable amount has to be broken down by rate with the rate shown. A clear-looking invoice can still be non-compliant.
Treating the KMD INF threshold as per invoice
It is €1,000 VAT-exclusive per transaction partner across the period. Many small invoices to one client add up into it.
Claiming 100% on a company car and then using it once privately
The 50% cap on running costs then applies for a year from that month. One personal trip is expensive.
Expecting a VAT refund to arrive by itself
It sits as a credit on your prepayment account until you file a digitally signed refund application.
Reading the small business scheme in English
It is documented in Estonian only — nine pages. The English site gives it one clause, the Russian site nothing at all.
Assuming a quarterly VAT return exists
Estonian VAT is monthly. The return, the annex, the VD report and the payment all land on the 20th.
Need an English-speaking accountant?
Estonian tax is simple until it isn't — an OÜ taking money out, a VAT registration, or income from more than one country. Get matched with an accountant who works in English and knows the rules for foreigners.
Frequently Asked Questions
What is the VAT rate in Estonia?
24% standard, since 1 July 2025. Reduced rates are 13% for accommodation and 9% for publications and medicines.
When do I have to register for VAT?
Once taxable supply exceeds €40,000 from the start of the calendar year. You then have 3 working days to apply, and EMTA has 5 to decide. A foreign person without a permanent establishment in Estonia has no threshold at all.
How do I work out VAT from a price that already includes it?
Multiply by the rate and divide by 100 plus the rate: × 24 ÷ 124 at the standard rate. On a €1,240 gross invoice that is €240 of VAT and €1,000 net. Taking 24% of the gross instead gives €297.60, which is the commonest error in this area.
Can I register for VAT before reaching the threshold?
Yes, but you must prove business is under way or planned. EMTA's Estonian page names the acceptable evidence: a business plan, preliminary contracts, lease or supply or works contracts, or the objects of the work. The 5-working-day clock runs from receipt of that evidence, and a voluntary application can be refused.
What is the reverse charge and when does it apply?
For a service to a VAT-registered business in another EU member state, the place of supply is the customer's country. You charge 0% Estonian VAT and the customer accounts for it. The invoice must carry the words "Reverse charge", and the transaction goes on the VD report. It does not apply to consumers, or to Estonian customers.
When are Estonian VAT returns due?
The 20th of the month following the taxable period — and that single date covers the KMD return, the KMD INF annex, the VD intra-Community report and the payment itself. Estonian VAT is monthly; there is no quarterly option.
How much input VAT can I reclaim on a company car?
50% on the car and on costs related to it, for a category M1 vehicle up to 3,500 kg with at most 8 seats besides the driver's. 100% only if it is bought to sell or rent out, used mainly for paid carriage of passengers or driving instruction, or used exclusively for business — and once any non-business use starts, the 50% cap applies for a year from that month.
What cannot I reclaim VAT on?
Anything bought for exempt supply, receiving guests, and meals or accommodation for employees — restaurant and hotel invoices are EMTA's own examples — except employee accommodation on a business trip. Passenger cars are restricted to 50% rather than blocked.
What is the cross-border small business scheme?
In force since 1 January 2025, it lets a small business trade in other member states without registering there, up to €100,000 of EU-wide turnover in the calendar year. You file a prior notification, get a number with an EX suffix, and report turnover quarterly. Note that it is exemption rather than zero-rating, so input VAT on the costs of operating abroad is not deductible.
What happens if I file my VAT return late?
Interest at 0.06% a day, which EMTA itself converts to 21.9% a year, running from the day after the due date. We found no published fine specific to a late KMD, but the absence of a published penalty is not the same as there being none.
Does my e-resident company need to register?
Only if it makes taxable supplies in Estonia above the threshold. Most sell B2B services elsewhere in the EU under the reverse charge, where no Estonian VAT is charged — but that changes the moment you sell to Estonian customers or to consumers anywhere. And until you register you cannot reclaim Estonian VAT on your own costs.
How do I deregister for VAT?
Apply to EMTA showing Estonian turnover has not exceeded €40,000 in the current or previous calendar year. Deletion takes effect on the date in EMTA's decision, and you pay VAT on goods you still hold whose input VAT you deducted. A business operating from another member state must have been registered at least 2 calendar years first.
Related Guides
Disclaimer. General guidance, not tax advice. VAT treatment depends on what you sell, to whom and where they are established. Confirm with the Estonian Tax and Customs Board or a qualified adviser before relying on any of it.