Estonia

Upcoming VAT rate changes Estonia has adopted the draft law to increase the standard VAT rate in the country from 20% to 22% from 1 January 2024.   Estonia has also approved the following VAT rate changes, effective 1 January 2025:

• Accommodation VAT rate increase from 9% to 13% 
• VAT rate increase for press publications from 5% to 9% 

It is important to note that the 13% VAT rate approved for 1 January 2025 is a new VAT rate that does not currently exist in Estonia, with the 9% reduced VAT rate currently co-existing alongside the standard 20% VAT rate.  Kofax will support the new VAT rate approved for 1 January 2025, but we will first turn our attention to supporting the new standard rate of 22% from 1 January 2024.  Kofax will be in contact with impacted Estonian suppliers and buyers in Q3 with further details to facilitate the new VAT rate.    

Estonia – miscellaneous VAT rate changes  European Union (EU) Directives typically provide a basis for Member States to absorb EU legislation into their own national legislative frameworks. It is customary practice for Member States to adopt EU law into their own domestic legislation. However, major international incidences such as the pandemic will have exposed the varying needs of each Member State as they encountered unique and exclusive challenges. The EU will have been keenly aware that a single legislative order may not accommodate the fluctuating needs of every Member State.   An EU Directive, published in the EU Official Journal in April 2022, afforded Member States with increased flexibility to set their own VAT rates, despite some broad restrictions still enduring. Consequently, we can expect VAT rate changes to be ubiquitous in 2023 and beyond.  Following the path of Suiza and the República Checa, who are in the process of amending VAT rates as part of a major fiscal overhaul in their respective countries, Estonia is the latest country to announce a VAT rate change in the country.   On 12 June 2023, the coalition government approved the following VAT rates: 

• 1 January 2024: Standard rate increase from 20% to 22%  
• 1 January 2025: Reduced accommodation VAT rate increase from 9% to 13%  
• 1 January 2025: VAT rate increase for press publications from 5% to 9% 

The bill incorporating the new VAT rates was approved on 19 June 2023.   Estonia is a compliant territory for Kofax and we will support the VAT rate changes as part of our e-invoicing solution for both Web Form and Integrated Solution Suppliers.   Our portal solution will include the new VAT rates in readiness for 1 January 2024 / 2025 as required. We will be in touch with impacted Integration Solution suppliers to manage accommodation of the new VAT rates. 

Proposed VAT rise VAT rate changes are significant tax measures, and, while once rare, are now becoming more ubiquitous in an era of economic uncertainty. Estonia is now following in the footsteps of its European counterparts Switzerland and Czechoslovakia by proposing a rise in its standard VAT rate, as well as an alteration to the VAT rate for services in the county. The proposed changes are as follows:

• Standard VAT rise from 20% to 22% - forecast presently for 1 January 2024
• The VAT rate applied to services would rise from 9% to the standard rate of 22% from 1 January 2025.

Estonia is a compliant territory for Tungsten Network and we will support the VAT rate change if confirmed.