Registering as a VAT payer in Estonia is actually not as complicated as it may first seem. Let us look at how it works and what being VAT-registered brings with it.
The right to submit the application belongs to
- a person with signing rights of the legal entity,
- a legal representative of a state or municipal institution,
- a sole proprietor (FIE), and
- a person authorised by them.
NB! Before starting the application, make sure you also have the corresponding right in the e-MTA.
Is VAT registration for you?
You can register voluntarily, but you must register once your company’s sales revenue in Estonia has reached 40 000 euros. You may register voluntarily at any time if you want to add VAT to your invoices and reclaim VAT on your purchases. Voluntary registration is worth it, for example, when your business model is B2B: your company offers services or products mainly to other companies and buys other companies’ services itself. It pays off because, given the 40 000 euro annual limit, most active companies are probably VAT-registered.
Submitting the application
Avalduse esitajal peab olema volitus „KMKR avalduste esitamine“.
To grant the authorisation, a person with the right to authorise must log in to the e-MTA in the representative role and choose “Leping ja seaded” (agreement and settings), then “Volituste administreerimine” (administration of authorisations). On that page, enter the ID code of the user being authorised and choose the authorisation “KMKR avalduste esitamine”.
Avalduse esitamiseks volitatud isikuna vali „Registrid“ > „Käibemaksukohustuslaste register“ > „Uus avaldus“ > „Käibemaksukohustuslasena registreerimise avaldus“ või „Piiratud käibemaksukohustuslasena registreerimise avaldus“.
Registering as a VAT payer step by step:
A question from a reader: I am filling in the VAT registration application in the e-MTA right now, but I got stuck, because the application offers the option “I wish to apply the special cash-based VAT accounting scheme”. I have read about it online for a couple of hours and still cannot tell whether to tick it or not. If you have not dealt with VAT before, all these extra options during registration raise a lot of questions and confusion.“Soovin rakendada kassapõhise käibemaksuarvestuse erikorda” – ma nüüd olen lugenud internetist selle kohta paar tundi, aga ikka ei saa aru, kas siis tasuks sinna linnuke teha või mitte. Kui varem pole kokku puutunud KMKR-ga, siis kõik sellised registreerumisel antavad lisavõimalused tekitavad kohe palju küsimusi ja segadust.
Answer: you almost certainly do not need this special scheme. It is meant for those who must give their clients long payment terms and have no money to pay the VAT until those invoices are paid. And it brings additional obligations.
The decision
The registration decision
The Tax and Customs Board makes the registration decision within five working days of receiving the application.
If the Tax Board needs additional documents proving that your business has started or exists, they will contact you within five working days by phone or post. In that case they make the registration decision within five working days of receiving the documents.
The Tax Board notifies you of the registration by email or text message and uploads the registration decision to the e-MTA. You will find the decision under “Teated” > “Haldusaktid” as well as under “Registrid” > “Käibemaksukohustuslaste register”.
The decision not to register
If a person is not engaged in business and is not starting one, the Tax and Customs Board will not register them as a VAT payer.
Nor will the Board register a person who has failed to submit the required additional documents on time.
The decision not to register
The Board uploads the decision to the e-MTA and sends a notice about it by email or text message. You will find the decision under “Teated” > “Haldusaktid” as well as under “Registrid” > “Käibemaksukohustuslaste register”.
What does VAT registration bring with it?
From the day of registration the person must fulfil the obligations of a VAT payer, including:
- adding VAT to the taxable value of the goods sold or services provided;
- calculating the VAT amount due, which must be paid to the state budget by the 20th day of the month following the taxable period (generally a calendar month);
NB! Input VAT on purchased goods and services can only be deducted if they were acquired for the purposes of taxable turnover. If there is no business, or the goods and services were acquired for VAT-exempt turnover, input VAT cannot be deducted.
- keeping documents, maintaining records and issuing compliant invoices;
- submitting the VAT return (form KMD) by the 20th of each month, and the income and social tax, funded pension and unemployment insurance declaration (form TSD) by the 10th. Filing the TSD is mandatory even when the company has no income tax to pay.
Now is the time to find yourself an raamatupidaja, kui seda veel tehtud ei ole!
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