Estonia will increase the standard VAT rate by January 2024

Estonia will increase the standard VAT rate from 20% to 22% by January 2024.

Estonia will increase the standard VAT rate to 22%, instead of 20%, by January 2024.

The amendment to the standard VAT rate includes two transitional measures:

  • When under the cash accounting scheme, the invoice issued may apply a 20% VAT rate if the supply of goods or services was made effective before 1 January 2024. This only applies to invoices issued until 31 December 2025.
  • When under a long-term contract agreed on transactions connected with immovable property, the VAT rate of 20% may still be applicable until 31 December 2025 under certain conditions.

As of 2024, the VAT rates applicable in Estonia will be:

  • Standard Rate: 22%, instead of 20%.
  • Reduced Rates: 9% and 5%.

Additionally, further changes are planned from January 2025:

  1. New 13% VAT rate for accommodation services: will be taxed at 13%, instead of the current 9% VAT rate.
  2. Press publications will be taxed back at 9%, instead of the current 5%. The VAT rate on these products was recently reduced to 5%, you can find here our VAT news on the topic.

Find here the overview of the current VAT rates in Estonia

It is important to assess the impact of these VAT rate changes on your compliance function. Your VAT reporting team should ensure correct reporting of transactions spanning periods under different rates. Credit notes and continuous supplies of services often raise questions about your correct reporting obligations. Contact Marosa to clarify tax point rules and VAT reporting obligations ahead of the VAT rate change in Estonia.

Find here the official announcement of the Estonian authorities.

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