- This text discusses Value-Added Tax (VAT) and its application in Estonia, comparing it to other countries.
- VAT is a consumption tax levied on goods and services at each stage of production.
- VAT laws, rates, and compliance rules vary between countries.
- Estonia’s standard VAT rate is 22 percent, increasing to 24 percent on July 1, 2025.
- The VAT registration threshold in Estonia is 40,000 euros in annual turnover.
- Estonia has advanced e-services for VAT registration and compliance.
- The UK’s standard VAT rate is 20 percent, with a registration threshold of 90,000 pounds.
- France’s standard VAT rate is 20 percent, with varying reduced rates. The VAT registration threshold is 85,000 euros for goods and 37,500 euros for services.
- The USA does not have a federal VAT, instead using state-level sales taxes.
- Estonia’s digital infrastructure simplifies VAT registration, filing, and payments for e-residents.
- Estonia’s tax system and low VAT threshold are advantageous for startups and SMEs.
- Estonian businesses can utilize the EU VAT refund system.
- Changes to lower VAT rates will take effect on January 1, 2025.
- The EU wide 100,000 euro threshold will also become active in 2025.
- Estonian companies must register for VAT if their annual turnover exceeds 40,000 euros.
- VAT returns are typically filed monthly, and payments are due by the 20th of the following month.
- VAT refunds are available for eligible business expenses.
- The One-Stop Shop (OSS) scheme can simplify EU cross-border VAT compliance.
- Estonia offers advanced e-services, a straightforward tax system, and a favorable environment for startups and SMEs.
Source: e-resident.gov.ee
Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.
