If you do not register for a VAT number before you reach the €40,000 mark, you will only have 5 days to complete the procedure. Otherwise, your company will be fined €1,300 by the Estonian government.What rate of VAT does Estonia charge?Estonia charges VAT at 20%
, but there are many exceptions to this rule. The biggest advantage to Estonia's VAT laws is that the 20% rate only applies if the services are sold to an Estonian business or an individual:
- Certain products only have a 9% VAT rate, such as books, and medical products
- If the services are sold to a legally registered entity within the EU, or to a non-EU entity, then 0% VAT is paid (if both entities already have VAT numbers)
- This does not apply to physical goods, however, — if physical goods are sold to a different EU state, then they are declared and taxed there.