The Estonian Parliament (Riigikogu) passed Bill No. 462 SE, on 13 November 2024,amending the VAT Act which introduces the legislation to implement the EU small business scheme for cross-border supplies, as outlined in Council Directive (EU) 2020/285 of 18 February 2020.
- Amendment of definitions:
The bill revises existing definitions within the VAT framework to ensure clarity and alignment with EU standards. - VAT exemptions for EU transactions:
It allows for VAT exemptions on goods and services purchased from sellers within the EU, provided that these sellers also apply the tax exemption. - Clarification on digital services:
The legislation specifies that the place of turnover will not be determined for services delivered via streaming or other virtual means, addressing the complexities of digital transactions. - VAT exemption rules for small businesses in Estonia and the EU:
A taxable person from another EU Member State can apply for VAT exemption in Estonia if their turnover in Estonia is under EUR 40,000 and total EU turnover is below EUR 100,000. Estonian small businesses can also apply for exemption in other EU countries if their EU turnover is under EUR 100,000 and local turnover is below the threshold in those countries.
The Act has a proposed effective date of 1 January 2025. It now requires signing into law and publication in the Official Gazette.
