VAT Rate Increase in Estonia by 2025
Estonia will increase the VAT rate applied to accommodation services and press publications. Also, the Estonian government is planning a new increase of the standard VAT rate from 22% to 24% by July 2025.
VAT Rate Changes in Estonia by 2025
Estonia approved several VAT rate changes set to take effect from January 2025:
- The VAT rate on accommodation services, including those with breakfast, will increase from the current 9% to 13%.
- Additionally, the VAT rate for press publications will rise from 5% to 9%. This means returning to the VAT rate applicable prior to August 2022.
To ease the transition, special provisions are in place for users of VAT cash accounting scheme. These provisions allow businesses to continue paying the lower VAT rates until December 31, 2026, under certain conditions:
- Specifically, VAT at 9% can be applied to accommodation services invoiced before January 1, 2025, and delivered after that date,
- Similarly, VAT at 5% can be applied to press publications invoiced before January 1, 2025, even though they are supplied afterward.
Take a look at the official information.
Furthermore, the Estonian government has announced a new increase of the standard VAT rate from 22% to 24% by July 2025. This measure is not yet officially approved; therefore, we need to follow up until its adoption. The standard VAT rate is Estonia has been recently raised from 20% to 22% in January 2024. Therefore, shall the new increase be adopted, that would be a 4-point increase of the standard VAT rate in less than three years.
Find here the overview of the current VAT rates in Estonia
Standard VAT Rate Change in Estonia by January 2024
Estonia increased the standard VAT rate to 22%, instead of 20%, in January 2024. The amendment to the standard VAT rate included 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 are the following:
- Standard Rate: 22%, instead of 20%.
- Reduced Rates: 9% and 5%.
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.