VAT in Estonia – VAT rates in Estonia 2026

Estonia has for years been building its position as a country friendly to entrepreneurs and investors. Stable regulations, digital administration and a transparent tax system mean that more and more companies consider operating there. One of the first issues that arises at the stage of planning expansion or company registration is VAT in Estonia. Knowledge of the rules of taxation of sales, the level of rates and registration obligations allows costly mistakes to be avoided and business to be conducted safely.

This article explains how Estonian VAT operates in 2026, what VAT rates in Estonia apply, and in which situations registration for Estonian VAT becomes necessary.

How does Estonian VAT work in practice?

Estonian VAT is an indirect tax added to the price of goods and services at successive stages of economic turnover. The structure of the system is based on principles common to the entire European Union, however each Member State independently determines the level of rates and the scope of their application. In practice, an entrepreneur selling goods or services in Estonia collects VAT from customers and then settles it with the Estonian tax authority. At the same time, they have the right to deduct input tax on purchases related to their activity. This mechanism means that the economic burden of the tax is borne by the final consumer, while the company acts as an intermediary. For foreign entities it is important that Estonian VAT is settled according to rules very similar to those known from other EU countries, which facilitates adaptation to local regulations.

What is VAT in Estonia in 2026?

One of the most frequently asked questions remains: how much VAT in Estonia applies to standard sales.

In 2026, the standard VAT rate in Estonia is 24%. This rate applies to the vast majority of transactions, both for goods and services. In addition to the standard rate, a reduced rate and a 0% rate also apply, mainly in international trade. Therefore, the VAT rate in Estonia depends directly on the nature of the product sold or the service provided.

VAT rates in Estonia and their scope of application

When discussing VAT rates in Estonia, it is worth remembering that the system is relatively simple. The standard rate of 24% covers most industries, including retail trade, online sales, advisory, marketing, IT and construction services. The reduced rate of 9% applies to selected goods and services of a cultural, educational and accommodation nature. This includes books, press and hotel services. The 0% rate mainly applies to exports of goods outside the EU and intra-Community supplies of goods. In such cases the sale is taxable, but no tax is payable, and the entrepreneur retains the right to deduct input VAT.

Such a system makes VAT in Estonia clear and predictable, which significantly facilitates financial planning.

When does the obligation to register for VAT in Estonia arise?

The obligation to register for Estonian VAT arises when a certain level of domestic turnover is exceeded. Currently, this threshold is EUR 40,000 per year. In practice this means that an entrepreneur conducting business in Estonia and achieving sales exceeding this limit must register as a VAT taxpayer and start charging tax on subsequent transactions.

However, it should be noted that in many cases registration is required regardless of turnover. This applies for example to companies storing goods in Estonia, participating in a local supply chain or providing certain services.

VAT registration in Estonia – what does the procedure look like?

The VAT registration process in Estonia is largely digitised. The application is submitted electronically to the Estonian tax authority together with basic company data and a description of planned activity. After positive verification, the authority assigns a VAT number allowing invoices with Estonian VAT to be issued legally and tax to be settled. The entire procedure is relatively quick, which is one of the advantages of the Estonian tax system.

Settling VAT in Estonia and submitting returns

After registration, the entrepreneur must submit VAT returns on a monthly basis. The return includes both taxable sales and purchases eligible for deduction. The deadline for submitting the return and paying the tax is generally the 20th day of the month following the given settlement period. Timeliness is important, as delays may result in interest being charged.

Deduction and VAT refunds in Estonia

The taxpayer has the right to deduct input VAT on purchases related to taxable activity. If in a given month input VAT exceeds output VAT, a tax surplus arises. This surplus may be refunded to the entrepreneur’s account or carried forward to the next settlement period. Estonian tax authorities are known for a fairly efficient refund process, especially for companies that submit returns regularly and correctly.

VAT in Estonia and international sales

In transactions between companies from different EU countries, the reverse-charge mechanism is most often applied. This means that the seller issues an invoice without VAT and the buyer accounts for the tax in their own country. In sales to consumers, e-commerce VAT rules apply, including the OSS procedure. In such cases, the VAT rates in Estonia appropriate for the given type of goods or service are applied.

Why does knowledge of Estonian VAT matter in practice?

Correct understanding of VAT in Estonia, the applicable rates and when registration becomes necessary allows problems with tax administration to be avoided and operating costs to be better planned.

Estonia remains one of the most stable and predictable tax environments in Europe. For many companies this means the possibility of conducting business in a setting that supports development and does not generate unnecessary administrative barriers. If you plan activity on the Estonian market, solid knowledge of VAT will be one of your basic operational tools.