VAT registration in Estonia

An Estonian company must register for VAT once its Estonian turnover passes 40 000 euros in a calendar year. It may register earlier by choice, if it can show real business in Estonia. This page explains the threshold, the deadline, the two kinds of registration (full and limited), deregistration and VAT groups. The Tax and Customs Board (EMTA, Maksu- ja Tolliamet) runs the register.

In short

• Registration is due when the turnover counted from 1 January passes 40 000 euros. Read more
• You must apply within 3 working days, and you are liable from the day you passed the threshold. Read more
• Register voluntarily before a large purchase that carries VAT, or you lose most of the deduction. Read more
• EMTA asks for proof of business in Estonia, also from companies of e-residents. Read more
• A limited registration (piiratud maksukohustuslane) only pays VAT on purchases from abroad. It never charges VAT and never deducts it. Read more
• Check the registration decision, not only the VAT number. Read more

When must a company register for VAT?

A company must register once its turnover with a place of supply in Estonia goes above 40 000 euros, counted from 1 January of the current calendar year (VAT Act § 19). The count starts again from zero each 1 January. It is not a rolling 12 months.

Since 01.01.2025 the count includes three kinds of supply (VAT Act § 19^1 (3)):

A transaction is "incidental" when it is not connected with the company's everyday business. EMTA's example: a toy maker with 38 000 euros of sales lends spare cash once and earns 3 000 euros of interest. The loan is incidental, so the company does not have to register (EMTA handbook). Keep a note in your files that explains why you left a financial or real estate transaction out of the count.

Two more rules:

• Only exempt and 0 percent supplies. If the whole year's turnover is exempt and 0 percent supplies (other than intra-Community supplies of goods), there is no duty to register, however large the turnover (VAT Act § 19 (1)). A company whose only income is 42 000 euros of residential rent does not have to register.
• After a deregistration on your own request, a fresh count starts on the day after the deregistration (VAT Act § 19 (2)).

The rates themselves are on the page Estonian VAT rates.

From when is the company liable, and how fast must it apply?

The company is liable from the day its turnover goes above 40 000 euros. It must apply within 3 working days (VAT Act § 19 (1), § 20 (1)). EMTA's example: if you pass the threshold on Friday the 2nd, the application is due by Wednesday the 7th.

• Effective date. EMTA registers the company as of the day the duty arose, not the day of the application or the decision (VAT Act § 20 (3)). EMTA decides within 5 working days.
• From that day the company adds VAT to its sales, issues VAT invoices and files returns (VAT Act § 3 (3), § 24 (1)).
• Late application. EMTA registers the company on its own initiative, back to the true duty day (VAT Act § 20 (10) and (11)).
• Invoices already sent without VAT are still taxable. Correct them so that they meet the invoice rules of VAT Act § 37. If the contract lets you add VAT on top, charge it: a business customer deducts it. If you cannot recover the VAT from the customer, get advice before you compute it.
• Interest. VAT paid late bears interest of 0.06 percent a day (Taxation Act § 115 (1), § 117 (1)).
• Returns. The VAT return (KMD) is due by the 20th of the next month. If the first period is shorter than 15 days, you may declare it with the next month (VAT Act § 27 (1)).

Apply in e-MTA, by a digitally signed email, or at a service bureau (EMTA handbook), or through a notary. A new company can also apply in its founding application in the e-Business Register (VAT Act § 20 (1)). EMTA advises to register a little before you reach the threshold, so that you have the VAT number when you start to invoice with VAT (EMTA handbook).

When is voluntary registration worth it?

Register voluntarily when the company buys assets or services that carry VAT, and will use them for taxable sales to customers who can deduct VAT. Apply before the purchase. A voluntary registration starts on the application date or a later date you choose, never earlier (VAT Act § 20 (2) and (4)).

"Before the purchase" means before the delivery and before any deposit or advance payment. A prepayment fixes the time of supply for the part paid (VAT Act § 11 (1) and (3)). Have every invoice issued to the company itself.

What the company gains:

• Input VAT on the asset and the running costs, as far as they serve taxable sales (VAT Act § 29 (1), § 31).
• VAT refunds while sales are still small.
• Neutral EU purchases. A registered company declares and deducts the VAT on an intra-EU acquisition of goods on the same return. An unregistered company that buys more than 10 000 euros of goods a year from other member states must register with limited status, and then pays that VAT with no deduction (VAT Act § 21 (2), § 25 (1)).

What it costs:

• VAT on every taxable sale, normally 24 percent, or a reduced or 0 percent rate where VAT Act § 15 gives one. Exempt supplies stay exempt.
• A monthly VAT return by the 20th, and invoices that meet § 37.
• Limits on the deduction. Private use by the owners and exempt use restrict it (VAT Act § 29 (4), § 32 (1)). For a passenger car, only 50 percent is deductible, unless an exception applies, for example a car used only for business (VAT Act § 30 (3) and (4)).
• The adjustment period. EMTA watches the input VAT on a fixed asset for 5 calendar years, or 10 for immovables. If the company deregisters or moves the asset to exempt use in that time, it pays part of the VAT back (VAT Act § 29 (10), § 32 (4) to (4^2)).

Registration gives nothing when the seller charges no VAT (a private seller, or a dealer under the margin scheme), or when your activity is exempt. Letting of immovables is exempt by default. A company that lets an office or a warehouse keeps its input VAT only if it opts to tax the letting by a written notice to EMTA before the supply. The option binds for at least two years. Residential property cannot be opted in (VAT Act § 16 (2) to (4)).

What proof of business in Estonia does the Tax Board ask for?

Every applicant must show that it carries on, or is starting, business in Estonia (VAT Act § 20 (4^1)). EMTA may ask for more evidence, and it refuses to register a company that shows no real business. An e-resident's company that is run entirely from abroad, with no customers, suppliers, staff or assets in Estonia, can find this test hard.

EMTA lists the kind of evidence it accepts: a business plan, preliminary contracts, contracts (lease, procurement, delivery, work), and the sites where the work is done (EMTA). A prepared file helps:

• signed or draft customer contracts and supplier quotes;
• a website and a price list;
• the Estonian address and the contact person (see e-residency, address and contact person);
• a short note on what you sell, to whom, and where the work is done.

The test also works later. EMTA may delete a registered company that does not carry on business in Estonia, after a written warning and a deadline to prove it (VAT Act § 22 (3^1)).

Two EU rules frame the test. A tax authority may not refuse a VAT number only because a new company has no staff or equipment. It may refuse it when objective evidence shows the number would probably be used for fraud (CJEU C-527/11 Ablessio). And for VAT, a business is established where its central administration is, where the essential management decisions are taken. A postal address is not enough (Regulation 282/2011, Art. 10). A company that is really run from its founder's home country may be seen as established there, for VAT and for corporate tax. Get advice in that country.

What is limited VAT registration?

A limited taxable person (piiratud maksukohustuslane) is registered only to pay Estonian VAT on what it buys from abroad. It cannot charge VAT on its own sales, and the Act denies it any input VAT deduction (VAT Act § 3 (2) and (5), § 25 (1)).

A company that is not VAT-registered must register with limited status, within 3 working days (VAT Act § 21):

• from the day it receives a service of the list in VAT Act § 10 (5) from a foreign business not registered in Estonia, for example advertising, consulting, IT, electronically supplied services or licences;
• when its purchases of goods from other member states go above 10 000 euros from the start of the year.

What it does:

• It pays VAT on its imports, intra-EU acquisitions and reverse-charged services, as a real cost.
• It files a VAT return only for the months with such purchases (VAT Act § 25 (1), § 27 (2)).
• If it shows VAT on its own invoice anyway, it must pay that VAT to the state, and the customer cannot deduct it (VAT Act § 3 (6), § 29 (3)).

A company registered only because it buys foreign services must not give its number to EU suppliers of goods while its goods purchases stay at or below 10 000 euros a year. If it does, it must pay Estonian VAT on the purchase made with that number, as if it were above the 10 000 euro limit (VAT Act § 25 (3)). Purchases from an EU supplier with a VAT number that ends in "EX" (the EU small business scheme) carry no Estonian VAT and do not trigger the registration (VAT Act § 3 (7)).

The limited registration ends on its own when the company registers in full. A company may also apply for deletion after 2 years, if its goods purchases from other member states stayed at or below 10 000 euros in the last calendar year and will stay so in the current one (VAT Act § 23).

For VAT on services bought from abroad, see VAT on cross-border services and OSS.

Can a holding company register for VAT?

A pure holding that only holds shares and receives dividends is not in business for VAT. It cannot register in full, and it cannot deduct VAT on its costs (VAT Act § 2 (2), VAT Directive Art. 9). A holding that sells real, paid services to its subsidiaries, such as management, IT or accounting, is in business and may register. It can then deduct VAT on its general costs, as far as they relate to that activity (CJEU C-108/14 Larentia + Minerva).

• A passive holding fails the proof of business. But it must still register with limited status when it buys a listed service from abroad, for example foreign legal advice, software as a service or advertising (VAT Act § 21 (1)). Hotel, restaurant and transport bills abroad do not trigger it.
• An active holding invoices its services at market prices, with VAT, and deducts input VAT. Management fees with no real service behind them invite a challenge. Document what you supply and why the price is at market value.
• An investment company that trades securities or lends money makes exempt supplies, so it cannot deduct input VAT on them (VAT Act § 16 (2) and (2^1), § 32 (1)). Since 2025, its non-incidental exempt financial turnover counts towards the 40 000 euros.

Can VAT on purchases before registration be deducted?

Only partly. The Act has three rules for purchases made before the registration date (VAT Act § 29 (5), (5^1) and (5^2)):

Goods already sold before registration give no deduction. Example: equipment taken into use in year 1 while the company is unregistered. The company registers on 1 January of year 2 and uses the equipment only for taxable sales. It can then deduct about 4/5 of the VAT, adjusted at each year-end for the actual use (VAT Act § 32 (4) to (4^2)).

The invoice must be in the company's own name and meet the invoice rules (VAT Act § 31 (1)). EMTA normally refuses VAT on an invoice issued to a founder personally (EMTA handbook). EU case law limits that refusal for costs a founder paid for the company's taxable activity before the company existed (CJEU C-280/10 Polski Trawertyn). Take advice before you give up a large claim. The simple way to avoid the problem is to register before the large purchase.

When can a company deregister from VAT?

A company may apply to deregister if its counted turnover stayed at or below 40 000 euros in the current and the previous calendar year, and it expects no more in the next 12 months (VAT Act § 22 (1)). EMTA may check the business first, and deletes the company as of the date in its decision. That date may be later than the date you asked for. Until then, the company charges VAT and files returns as before.

EMTA also deletes a company on its own initiative (VAT Act § 22 (3) to (4)):

• when the company filed no VAT return for six periods in a row (may);
• when the company is not in business in Estonia, after a warning (may);
• when the company or its activity has ended (must).

On deregistration, assets on hand cost VAT (VAT Act § 29 (10)):

• Goods still held whose input VAT was deducted: VAT is due on their cost, on the last return.
• Fixed assets: the years left in the adjustment period count as non-taxable use, and that share of the deducted VAT is paid back. Example: 10 000 euros of VAT deducted on equipment in year 1, deregistration at the start of year 4: about 2/5, or 4 000 euros, is paid back.

Before you deregister a company that holds a costly asset, compute the payback. Staying registered until the adjustment period ends is often cheaper. After the deletion date, never show VAT on an invoice: that VAT is payable (VAT Act § 3 (6)).

What is a VAT group?

A VAT group is two or more Estonian VAT-registered companies, all in business in Estonia, that register together as one taxable person (VAT Act § 26). Possible members are a parent and its subsidiaries, companies that are economically and organisationally linked and more than 50 percent owned by the same person, or franchise partners. A passive holding cannot join.

• Benefits. Supplies between members are outside VAT and need no invoice. The representative member files one return and makes one payment. This saves real money when a member has exempt activity, such as a real estate or finance company.
• Joint liability. All members are jointly and severally liable for the group's VAT, also after the group ends. Check the finances of every member before you join.
• Procedure. The representative files the application in e-MTA and every member confirms it. EMTA decides within 30 days, and the group starts on the first day of a month, normally the month after the decision (VAT Act § 26 (5); EMTA handbook).

The VAT return changes from 01.01.2027: the per-member annex and the separate VD report are removed from the Act (VAT Act, version from 01.01.2027). Check with EMTA how a group reports from then on before you plan one.

How do you check that the registration is full, not limited?

Read EMTA's registration decision and the VAT register data in e-MTA. They say whether the company is a taxable person (maksukohustuslane) or a limited taxable person (piiratud maksukohustuslane), and from which date. A valid EE number alone proves nothing: a limited registration also gets a number (VAT Act § 20, § 21).

1. At founding, choose registration as a VAT taxable person in the e-Business Register founding application, not the limited form.
2. After registration, open the decision and check the status and the start date. Check that your first VAT return is the full return, not a limited return with purchases only.
3. Signs of the wrong status: your return shows no VAT on your sales, or you cannot enter input VAT.

If the status is wrong, apply for full registration. The limited registration then ends on its own (VAT Act § 23 (1)). The full registration starts on the application date, not earlier, unless you had already passed the 40 000 euro threshold (VAT Act § 20 (3), (4) and (11)). VAT shown on invoices in the meantime is payable, with no deduction. The usual fix: credit those invoices, reissue them without VAT with a note that the company is not a VAT taxable person, and return the VAT to the customers.

Once registered, see VAT deduction, invoices and returns for the monthly work, and the VAT calculator to add or remove VAT.

General information, not advice for your situation. The law as in force on 30.09.2026.