Tax rate by region Estonia

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VAT on SaaS in Estonia: A Guide to Compliance

Estonia’s modern and transparent tax administration reflects the EU’s VAT system implementation in 2000. As a consequence, businesses selling SaaS in Estonia must adhere to the standard 20% VAT rate. While some categories, like educational services, qualify for exemption, it’s crucial to correctly determine the applicable VAT rate and comply with the regulations.

Estonia

Estonia adopted the EU VAT system in 2000, focusing on modernizing its tax administration and improving compliance.

Official government link: Estonian Tax and Customs Board

20.00%

E-products and services VAT/Sales tax rate

9.00%

Reduced tax rate

Reduced tax rate product categories

E-books have reduced tax

Exempted product categories

Some educational services may be exempt

Reverse charge mechanism for B2B sales

Yes

Tax ID validation required

Yes

When do you have to register

Non-resident companies have to register as soon as goods are being delivered or services are being provided

Online registration possible

Yes

Local representative needed

Yes

Registration procedure

Individuals seeking to apply for a special regime must submit a registration application to the Department of Taxes and Customs.

Taxable persons in Estonia should use the e-MTA portal, navigating to “Registers and inquiries” – “Registration” – “Registering as a user of special schemes for e-commerce and services (union-OSS)”.

List of digital and electronic services liable for tax

A digital product refers to any item that is stored, delivered, and utilized in an electronic format. These products or services can be received via email, downloaded from the Internet, or accessed directly on a website. Examples include, but are not limited to:

Audio, visual, or audiovisual content
Downloadable and streaming music, such as MP3 purchases or music apps
Cloud-based software and services, including SaaS, PaaS, and IaaS
Websites, web hosting services, and internet service providers
Non-fungible tokens (NFTs)

Penalties

The taxpayer must calculate and pay the tax within the designated timeframe. If they fail to do so, starting from the day after the deadline, the tax authority will impose interest at a rate of 0.06% per day.

Registration threshold

No threshold, non-resident companies must register for VAT

Filing interval

Quarterly

Filing deadline

By the 20th day of the month following the reporting period

E-invoicing requirements

Not mandatory

Record keeping

Relevant records must be kept for at least 10 years

Effortless Subscription Management and Billing

SaaS VAT Compliance in Estonia: Key Deadlines and Best Practices

Compliance in Estonia entails quarterly VAT return filings with a deadline of the 20th day following the reporting period. Maintaining proper records, including invoices and receipts, for at least 10 years is essential. Though not mandatory, utilizing e-invoicing can streamine VAT management. Consulting tax professionals is highly recommended for navigating the complexities of SaaS VAT compliance, ensuring accurate calculations, and avoiding potential penalties.

Location and VAT: Understanding Estonian SaaS Tax Obligations

Understanding how customer location impacts your VAT obligations in Estonia is crucial. For example, if a SaaS company provides services to a business in another EU country, the reverse charge mechanism might apply, meaning the customer is responsible for paying the VAT. In contrast, selling to a customer outside the EU generally does not incur VAT.

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