VAT, EORI, IBAN for Estonian company: what does it mean?
During the incorporation of an Estonian company, you can face these quite complicated terms: VAT, EORI, and IBAN are highly important for each company. If you are opening your first company or completely unfamiliar with how companies in the EU work, this topic might be a bit hard but no worries, we are here to help you navigate through this cloud of unknowing.
VAT in Estonia
VAT (Value Added Tax) is a consumption tax that is imposed on the price of goods and services, that is charged on every step of the commodity exchange. The VAT rate in Estonia is 22% (standard rate) but it might be reduced to 9% if you supply certain goods and services. You become VAT liable (obliged to get a VAT number) in case of the excess of the threshold which is 40000 EUR. You can read more about these and other Estonian VAT subtleties in this article.
EORI — Economic Operator Registration and Identification Number
EORI is a unique number used in the European Union for the identification of companies and individuals (economic operators — special legal status) engaged in a customs-related field in the EU. Your business can operate both in and out of the EU. Each company working with importation, exportation, or transit of goods is obliged to get this number that makes its activity legal and enables a company to work freely in an inter-economic area. Remember that you should get this number before starting your customs activity.
This number is issued by the customs authority of a Member State of the EU where a company is incorporated. In the case of Estonian companies, you have to obtain an EORI in the Estonian Tax and Customs Board and this process will be done free of charge and fully online (as well as almost everything in Estonia). A unique EORI number registration means the recording in the Economic Operators Registration and Identification system where all EORI numbers are listed.
Remember that if your company is not engaged in trading physical goods throughout the European Union or sells only digital products, you don't need to obtain an EORI number. In the case of Estonian companies, e-Residency will be enough for working in the main fields of economic life. Note that EORI is a unique number, which means that a company can be registered just under the only one number. If you need to review your EORI or check the absence of a number, visit this official website.
IBAN — International Bank Account Number
The name speaks for itself. IBAN is an international 20-digit number used for both domestic and international transactions, it simplifies and standardizes your interaction with banks and financial institutions across not only the EEA but almost all over the world. You can check what countries introduced IBAN here. Yes, earlier it was a special BBAN number for domestic payments, but since 2014, domestic and international transactions have been set to IBAN in Estonia. An IBAN number actually made international business life much easier and safer because of the standardization of the payment process and the deliverance of possible mistakes with operations between different countries.
You should obtain an IBAN number if you consider paying invoices from all over the world. An IBAN will make your transactions secure, easier, and faster. You can get this number in Estonian banks. To check your IBAN number visit an official tool.
How Enty Can Help You With Obtaining
Our job is to make things easy for your company. And, of course, we can help you with all of these things. If you want to obtain VAT, EORI, or IBAN as soon as possible, feel free to contact us. Enty can get you rid of a lot of time-consuming operations like company incorporation, accounting, and help you perform so many exhausting tasks with ease. Forget about struggles, just visit our website to be one step closer to the paperless future.
