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Value Added Tax (KM) in Estonia - 2026

What is Value Added Tax (KM)?

Value Added Tax in Estonia (Estonian: Käibemaks, abbreviated KM) is a consumption tax applied to virtually all goods and services supplied in Estonia. VAT is passed from registered businesses to customers and then paid to the Estonian Tax and Customs Board (EMTA).

VAT Rates in 2026

Standard rate 24%: From July 1, 2025 and continuing in 2026. This increase from the previous 22% rate is permanent and applies to all general goods and services including consulting, food, electronics, and software.

Reduced rate 13%: Applies to accommodation services (hotels, guest houses). This replaced the old 9% rate for accommodation starting in 2025.

Reduced rate 9%: Books, educational materials, newspapers, magazines, medicines, medical equipment, some hygiene products, and printed publications

Zero rate 0%: Exports outside EU, B2B supplies between EU countries, and some international services

Services Exempt from VAT

Some services are completely exempt from VAT:

Insurance services

Medical services

Formal education

Financial services

Mandatory Registration Threshold

The annual turnover threshold for mandatory VAT registration is €40,000. Only sales where Estonia is the place of supply count toward this threshold.

Once exceeded, registration must be completed within 3 working days.

Non-resident businesses conducting taxable activities in Estonia must register regardless of turnover.

Voluntary Registration

Businesses can voluntarily register before reaching the €40,000 threshold if they have a clear connection to Estonia under EU VAT rules. Voluntary registration is typically useful for businesses with significant expenses in Estonia wanting to recover input VAT.

Reporting and Payment

Most businesses file monthly VAT returns

Businesses with turnover under €100,000 can request quarterly reporting

Reporting deadline: 20th of the month following the reporting period

All returns are submitted through the online e-MTA system

Important Rule for Digital Sales in EU (OSS)

If your digital sales to consumers in other EU countries exceed €10,000 annually, you must apply the VAT rate of the destination country, not Estonia's rate.

To simplify this, you can register under the European One-Stop Shop (OSS) scheme available in Estonia to submit all your EU VAT obligations in a single return.

Input VAT Deduction

Registered VAT businesses can deduct VAT paid on purchases of goods and services used in their business activities from their output VAT. If input VAT exceeds output VAT, you can claim a VAT refund.

Practical Tips

Common business error: Claiming VAT deductions for non-deductible expenses like entertainment or personal vehicle use without proper documentation

Your invoices must meet legal requirements including: seller's VAT number, invoice number, description of goods/services, and VAT amount shown separately

If filing late, contact EMTA before the deadline

Source: [Estonian Tax and Customs Board — emta.ee](https://www.emta.ee)

Value Added Tax (KM)