VAT
Investor considerations:
- Estonian VAT legislation is based on the EC VAT Directive (2006/112/EEC).
- The standard VAT rate is 20% from 1 July 2009 and the reduced rate is 9%.
- Estonia applies an extended reverse charge mechanism.
- An option to tax is available in respect of certain exempt supplies.
The current VAT Act was introduced effective from 1 May 2004 when Estonia joined the EU. VAT as such was introduced in Estonia effective from 1992 and is known in Estonian as “käibemaks”.
VAT applies to the supply of goods and services performed by a taxable person in the course of its business activities in Estonia.
A taxable person is a person who is engaged in business, which is independent economic activity in the course of which goods or services are supplied, and is registered or required to register as a taxable person.
The standard 20% rate applies to all supplies of goods and services not qualifying for a reduced 9% rate or exemption. A reduced rate applies to accommodation, books, certain periodicals, listed pharmaceutical products and medical devices. The VAT rate on the export of goods, intra-Community supply of goods and certain services is 0% (i.e. exemption with credit).
VAT and all other taxes are administered by the Estonian Tax and Customs Board (www.emta.ee).
The information covered in this chapter can also be found on www.globalvatonline.com, PricewaterhouseCoopers' global website that provides a comprehensive guide to global VAT information from over 70 countries worldwide.
