Do I Need VAT Registration in Estonia? Complete 2026 Guide

Do Estonian OÜ Companies Need VAT Registration?

If you run an Estonian OÜ (private limited company), understanding your VAT obligations is one of the most important compliance tasks you will face. The rules are clear but often misunderstood — especially for e-Residents running digital businesses.

This guide covers everything you need to know about VAT registration in Estonia in 2026.

The €40,000 VAT Threshold

The fundamental rule is simple: you must register for Estonian VAT (KMKR) once your taxable turnover exceeds €40,000 within a calendar year.

Key points about this threshold:

• The threshold applies to a calendar year (January 1 – December 31), not a rolling 12-month period
• Only taxable supplies count — VAT-exempt supplies (certain financial services, insurance, healthcare) do not
• The threshold has been fixed at €40,000 since 2018 and is not expected to change in 2026
• Once you cross the threshold, you must register within 3 business days — not at the end of the month

What Happens If You Miss the Deadline?

If you fail to register for VAT within 3 business days of crossing the threshold, EMTA (Estonian Tax and Customs Board) can:

• Issue a fine of up to €3,200
• Impose retroactive VAT liability from the date you crossed the threshold
• Calculate interest on unpaid VAT at 0.06% per day

EMTA actively monitors Business Registry data and can detect late registrations. Don't wait.

Voluntary VAT Registration

You don't have to wait until you reach €40,000. Voluntary VAT registration is available at any time via the e-MTA portal.

Why might you want to register voluntarily?

• You have significant business expenses with VAT that you can reclaim (equipment, software subscriptions, office space)
• Your clients are VAT-registered businesses and expect a VAT invoice
• You are building a professional business profile and want to appear more established
• You plan to expand into EU markets and want to simplify cross-border VAT compliance

VAT for Digital Services to EU Consumers

If your Estonian OÜ sells digital services (SaaS, online courses, digital downloads, streaming) to private consumers in the EU, a separate threshold applies.

The EU OSS €10,000 Threshold

Under EU VAT rules effective since July 2021, if your cross-border digital B2C sales to EU consumers exceed €10,000 per year, you must charge VAT at the rate of the consumer's country — not Estonia's 22%.

For example:

• A customer in Germany buying your SaaS should be charged 19% German VAT
• A customer in France should be charged 20% French VAT
• A customer in Sweden should be charged 25% Swedish VAT

The One Stop Shop (OSS) Solution

Rather than registering for VAT in every EU country, Estonian OÜs can use the EU One Stop Shop (OSS) scheme administered by EMTA. This allows you to:

1. File a single quarterly OSS return via e-MTA
2. Pay all EU VAT in one place
3. EMTA distributes the tax to each member state

OSS registration is free and available via the e-MTA online portal. Once registered, OSS returns are due on the last day of the month following each calendar quarter.

What Is the VAT Rate in Estonia?

Estonia's standard VAT rate is 22% (raised from 20% in January 2024).

How to Register for VAT in Estonia

Step 1: Access e-MTA

Log in to the EMTA e-services portal at emta.ee using your e-Residency digital ID or mobile ID.

Step 2: Submit VAT Registration Application

Navigate to VAT → VAT registration and complete the online form. You will need:

• Company registration number
• Bank account details
• Description of business activities
• Expected annual turnover
• Date from which you want registration to be effective

Step 3: Processing Time

EMTA typically processes VAT registration applications within 5 business days. You will receive your KMKR number (e.g., EE123456789) by email.

Step 4: Start Issuing VAT Invoices

Once registered, all your taxable invoices to Estonian and EU clients must include:

• Your KMKR number
• The VAT rate applied
• The VAT amount
• Both the net and gross amounts

VAT Returns — Quarterly KMD

Once VAT registered, you must submit a KMD (VAT return) quarterly. The deadline is the 20th of the month following the end of each quarter:

Important: You must file a nil return even if you had no transactions in a quarter.

Common VAT Mistakes to Avoid

1. Counting your total revenue instead of taxable turnover — if you have any VAT-exempt supplies, those don't count toward the €40,000 threshold
2. Confusing the Estonian VAT threshold with the EU OSS threshold — they are different rules
3. Waiting until year-end — the threshold applies on a running calendar year basis
4. Not filing nil returns — EMTA will notice and issue a late filing fine
5. Forgetting to apply reverse charge on EU B2B services — if you buy services from EU businesses (e.g., AWS, Google Workspace), you must apply reverse charge VAT

Frequently Asked Questions

Do I need VAT if all my clients are outside the EU?

If your clients are all outside the EU, your supplies are generally zero-rated (0% VAT). However, you should still register for VAT if your turnover exceeds €40,000, as the registration obligation applies regardless of where your clients are.

Can my Estonian OÜ stay under the VAT threshold deliberately?

Yes — structuring your business to stay under €40,000 is legal, but tax avoidance arrangements are scrutinized. EMTA may look at related-party transactions if they appear designed to artificially split revenue.

Does receiving dividends count toward the VAT threshold?

No. Dividend income is not a supply of goods or services and does not count toward the VAT registration threshold.

Can I deduct input VAT on expenses before I hit the threshold?

Only after you are VAT-registered. Input VAT on expenses incurred before your registration effective date is generally not recoverable.

What if I only earn revenue in some months?

The €40,000 threshold is a cumulative calendar-year total. Sum up all taxable turnover from January 1 of the current year. Once that total exceeds €40,000, you must register.

Need Help Tracking Your VAT Threshold?

iResident automatically tracks your annual revenue against the VAT threshold and sends you alerts when you're approaching the €40,000 limit. Start your free compliance dashboard →

This article is for informational purposes only and does not constitute legal or tax advice. Consult a licensed Estonian tax advisor for your specific situation.