Estonia reduces VAT rate on press releases to 5%

Estonia reduced the applicable VAT rate on press publications from 9% to 5%. Change applies to both, physical and electronic supports. 

Advertising-driven press publications or private advertisements as well as erotic, pornographic, video or music content will remain subject to the standard VAT rate of 20%. Also, it is important to differentiate press publications from books, subject to the reduced rate of 9%.

The official announcement can be found here.

To determine if the publication is to be considered a press publication, there are some key elements to consider. Normally, when the publication is assigned an ISSN number (International Standard Serial Number), it will normally qualify as a press release. This is because newspapers and magazines are generally assigned an ISSN number. However, you should consider the following:

•  When the publication has both an ISSN and an ISBN (International Standard Book Number) numbers, then publication is considered a book subject to 9% VAT rate, and not a press release.
• When the publication only has an ISSN number, it could also be considered as a book, subject to 9% VAT rate. This is because yearbooks, monograph series, periodic statistical collections also receive an ISSN number, but do not fall under the definition of press publication.

When it is not clear, the tax authorities will decide on a case-by-case basis in cooperation with the taxpayer.

Why are VAT rate changes important?

It is important to assess the impact of this VAT rate change in 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 related to the VAT rate changes in Estonia.