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From 1 July 2025 the standard VAT rate will be 24%.

From 1 January 2022, the Estonian Value-added Tax Act will have a new section, 291, setting forth the conditions on the basis of which taxable persons can reduce their tax liability on bad debts. This is a long-awaited addition to Estonian tax law that has previously been discussed but has not gone beyond the draft legislation stage.

As of 1 July 2021, in addition to the term “low-tax territory”, the term “non-cooperative jurisdiction” has appeared in the Income Tax Act. The amendment is related to the European Union's safeguard measures aimed at preventing tax evasion in transactions with companies located in so-called tax havens.

Companies that sell physical goods to European countries all too often have to grapple with the destination country’s complicated VAT system, but in summer 2021, the situation will become simpler and the administrative expenses related to declaration of taxes will decrease.

This Briefing Paper provides insight into the latest VAT and Customs developments for both importers and exporters of goods and services in a ‘no-deal’ scenario.

Goods and services are purchased constantly online in Estonia, yet our online retailers have untapped potential – we are lagging a bit behind the European Union average in cross-border online retail. It is worth putting more effort into sales of electronic goods and services to consumers in other member states, especially given that the European Commission has and will continue to simplify cross-border e-commerce, including changes in the tax system.

The European Union has adopted new rules on VAT that will simplify and facilitate e-commerce. The rules will come into effect in full on 1 January 2021, but companies that provide electronic services will be able to benefit from the rules already starting 1 January 2019.

Who will gain from the change in the threshold for registration as VAT payer?

Another change has been made to the Value Added Tax Act, under which, starting 1 December of this year, only 50% of the input VAT on cars and car-related expenditures may be deducted.

The Value Added Tax Act sets forth four categories of goods or services on which a taxable person can voluntarily impose VAT. In general these cases involve tax-exempt supply, but VAT can also be imposed on the sale of these goods or services if the tax authority is notified of this in advance in writing. At first glance, it may seem curious why anyone should want to impose VAT voluntarily only to forward the tax to the state, but there is a reasonable explanation.

Until the beginning of 2015, the procedure set forth in Section 43 of the VAT Act for imposing VAT on electronically supplied services applies only to third-country persons engaged in enterprise. In accordance with the rules valid up until the end of 2014, it is possible to apply special procedure for VAT taxation of electronically supplied services (referred to in this guide simply as “special procedure”) on condition that the service is supplied by a third-country person engaged in enterprise that is not registered in any Member State as a taxable person (referred to hereinafter as third-country taxable person) to an EU Member State person that is not registered as a taxable person or limited taxable person – i.e. to an end consumer, usually an individual.

1 December saw an amendment to the Value-Added Tax Act enter force that does away with the term “sõiduauto omatarve” (own use of a passenger car). With a restriction placed on input VAT deductions, there is no longer a need to impose value-added tax on private consumption. Thus the general rule is that VAT will no longer be imposed on use of a company car for a non-business-related use; instead, the right to deduct input VAT will be curtailed.

During 2014 a number of tax changes have taken place and in 2015, key tax changes in a number of fields lie ahead.

Starting on 10 February 2015, all circumstances that enable a company to make income tax-exempt disbursements to shareholders or partners in the future must be declared.