The VAT rate is 20%. However, obtaining the VAT number isn't mandatory until you reach €40 000 in sales in a calendar year.
After a company exceeds the threshold, there are only 3 business days to register yourself as a taxable person. VAT payers must pay VAT to the Estonian Tax and Customs Board and submit monthly VAT returns (even for the months when there could be nothing to declare). Voluntary registration before reaching the registration threshold is also possible. The VAT basics are:
1. Sales to non-VAT registered EU entity or natural person: 20% VAT must be added.
2. Sales to VAT-registered EU entity : 0% VAT
3. Sales to non-EU entities or natural persons: no VAT is added.
It's important to understand where the turnover is created, what type of service/product you're selling (some niches have lower tax rates as well), etc, as there are several exceptions to these rules.
Physical products have different VAT rules, and once you exceed the turnover threshold the Member State has, you need to register and declare VAT in that target market. You can find the thresholds from here.
VAT number can be obtained via e-tax office (you can ask your support company and accountant to give you instructions) or at the time of registering the company.
And that's it! Of course, each case is quite specific, if your company plans to hire someone, special taxes will apply, please feel free to address your questions to our specialists
in order to get more information on taxation for your specific case. We will be delighted to answer your questions via email or schedule a call with you.