VAT Returns in Estonia: How to File VAT Declarations

We’ve covered VAT Basics in our previous article already, so we won’t go over what VAT is again. So, each company with a VAT number is required to declare and pay VAT to the tax authority by the 20th day of the following month.

In a VAT return (or ‘declaration’), a taxable person (business) gives the tax authorities in the EU country where they are registered information about:

• their taxable (taxed/exempt) transactions;
• the VAT they have charged their customers (output tax) and been charged by their suppliers (input tax);
• the amount of VAT payable (or refundable).

Basically, VAT Return calculates how much VAT a company should pay or be reimbursed.

Basically, all Estonian companies with a VAT number are obliged to file a VAT return. Download the KMD form and its annex here.

VAT tax returns can be filed using the e-Tax/e-Customs online environment: VAT declarations on form KMD and an Annex KMD INF listing all sales and purchase invoices with domestic counterparties exceeding EUR 1,000 in one month must be declared on form KMD INF. Supplies of services to VAT-registered customers of other EU Member States must also be declared in the monthly EC sales list due by the 20th of the following month.

So, in order to file VAT Return, a company must collect incoming and outgoing invoices, as they serve as a basis for the declaration itself and must be listed in the annex. Outside of that, companies are obliged to store all invoices electronically for the next 7 years.

Make sure that all information presented in the form KMD INF is reflected in your invoices.

Correct submission of VAT returns is highly important as penalties for non-compliance are quite severe. Failure or delay of VAT return submission/payments will result in a maximum penalty of €2,000.

Submission of incorrect VAT return will result in a maximum penalty of €3,200. Deliberate inaccuracies will cost your company a maximum of €32,000. Alongside, there is an interest charged on late payment of VAT due at 0.06% per day.

For someone unfamiliar with accounting or tax regulation, it might be quite challenging to file VAT returns correctly without mistakes that later might result in fines.

With Enty, you won't need to worry about it. All you need to do is upload all your invoices on a monthly basis in our system and our accountant will create and file a report to the authorities. Easy as that. All your actions are reduced to correct storage of invoices and uploading the files to our system in time. With our new Open Banking feature, you don't also need to care about your bank statement — it will be created automatically and processed by your accountant.

Outside of automating accounting and tax reporting for your company, we also include 1-hour consultation with an accountant per period in a package, so you will be able to make sure that everything is correct and address all questions to the professional.

And if you don't have a VAT number yet, Enty will be able to help you obtain it as well. Forget about hiring lawyers or doing things manually, Enty will help you save time and money and focus strictly on your business. Obtain VAT, EORI, or apply for OSS. Just purchase one of Enty's subscriptions, leave a request, and you are good to go. And that's only the tip of the iceberg, join Enty today to bring your company to a new era.