Invoicing and Tax regulation in Estonia

Invoicing Regulation in Estonia

In Estonia, creating and issuing invoices are of utmost importance, especially following a business transaction. The regulation mandates that every business must issue invoices for services or goods they provide. Businesses are also required to retain copies of all invoices issued and received for at least 7 years for audit and inspection purposes.

Real-time Reporting / Fiscalization in Estonia

Real-time reporting is mandatory for every business establishment in Estonia. This necessitates businesses to report their sales data to the tax authorities in real-time. The Estonian Tax and Customs Board has developed an electronic system for real-time fiscalization to ensure all businesses comply effectively.

E-invoicing in Estonia

E-invoicing is mandatory for all B2G (business-to-government) transactions in Estonia. As of 1st July 2019, following European Union Directive (2014/55/EU), all suppliers to government bodies must send invoices electronically. However, e-invoicing is not yet mandatory for B2B and B2C transactions.

VAT/GST/Tax Compliance in Estonia

Estonia has a standard VAT rate of 20%, with reduced rates of 9% and 0% for certain goods and services. Businesses are required to be VAT registered if their annual turnover exceeds €40,000. The VAT returns must be filed and any tax due must be paid monthly (by the 20th of the following month). Non-resident businesses are required to register for VAT successively for taxable supplies. There are no thresholds in such cases.

Overall, with its simplified tax and invoicing compliance, Estonia stands as a very flexible and conducive environment for business operations. It is especially preferred by digital and online businesses.

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