VAT rates
In Estonia, VAT rates are generally divided into four different rates, which are as follows:
- General VAT rate 22%
- 9% rate, used for books, medicines, and hotels.
- 5% rate, used for electronic publications.
- 0% rate, used for EU sales.
As seen from the list above, different products and services are taxed differently. For this reason, it is important to consider VAT immediately when starting a business so that relevant obligations are properly handled from the beginning.
By contacting an accounting firm from the very beginning of your business, you can ensure that these matters are handled properly as well.
If you are starting a business or need help with VAT, we are happy to assist you!
More information about our service can be found here: Accounting.
Read more about VAT.
Developing VAT rates
Developing VAT rates is a complex process that involves considering economic, social, and political factors. The aim is to create a balanced tax system that supports state revenues without disproportionately burdening citizens and businesses.
The process begins with an analysis of the market and economic situation, followed by consultation with experts and stakeholders, and ends with legislative debate. Developed VAT rates must comply with European Union directives and consider the dynamics of international trade, while ensuring effective tax collection and reducing tax fraud.
How should the VAT rate be displayed on a sales receipt?
The VAT rate should be clearly and unambiguously presented on the sales receipt. Usually, the respective VAT rate in percentage terms is indicated next to the price of each good or service. The receipt should also show the total price without VAT, the VAT amount separately, and the final total price including VAT. The purchase receipt must show the VAT amount clearly divided between different VAT rates. It is possible that several products/services under different rates have been sold with the same receipt, and they must all be listed on the invoice.
Also, the receipt should have a reference to the VAT payer and his registration number. Clear and detailed presentation of VAT on the receipt helps to avoid misunderstandings, simplifies accounting and ensures tax compliance in accordance with the law. This is important for both consumers and businesses.
Read more on the website of the Tax and Customs Board.
How should the VAT rate be displayed on a purchase receipt?
The VAT rate should be clearly and unambiguously presented on the purchase invoice. Usually, the respective VAT rate in percentage terms is indicated next to the price of each good or service. The receipt should also show the total price without VAT, the VAT amount separately, and the final total price including VAT. The purchase receipt must show the VAT amount clearly divided between different VAT rates. It is possible that several products/services under different rates have been sold with the same receipt, and they must all be listed on the invoice.
Also, the receipt should have a reference to the VAT payer and his registration number. Clear and detailed presentation of VAT on the receipt helps to avoid misunderstandings, simplifies accounting and ensures tax compliance in accordance with the law. This is important for both consumers and businesses.
What is VAT?
VAT is one of the many taxes that should be familiarized with when considering starting a business so that all tax-related obligations can be taken on from the start. In most cases, VAT must be paid throughout the entire supply chain for all goods and services, including sales to the final consumer. This includes stages of the production process such as ingredients, transport, assembly, supply, packaging, insurance, and shipping costs to the end consumer.
Read more on the Tax and Customs Board website.
VAT rates in other EU countries
As we mentioned earlier, the tax rates are also related to the internal regulations of the EU, so it is not only an internal tax in Estonia that would not be used elsewhere. In general terms, it can be stated that VAT is very widely used, and more than 150 states apply VAT as part of the state’s tax revenues.
VAT rules may differ in different EU countries. Consult local sources for more information about the regulations in the country where your business operates. Although tax rates and their amounts may vary slightly between EU countries, the general principle remains the same.
Each EU country has a standard rate of tax on most supplies of goods and services, which must not be less than 15%.