Calculation and refund of VAT in Estonia

The article covers key aspects of calculating and refunding VAT in accordance with the VAT Act (VTA) and the Regulations of the Ministry of Finance of the Republic of Estonia. It provides detailed information on the calculation and refund of VAT for businesses operating in Estonia.

Key provisions about calculation and refund of VAT

According to Articles 1 and 3 of the VTA, VAT is an indirect tax levied on the sale of goods and services in Estonia. Taxpayers are legal entities, sole proprietors and individuals engaged in entrepreneurial activities.

Taxable object

The objects of taxation for VAT are:

• sale of goods and services;
• import of goods;
• purchase of goods and services from foreign suppliers.

However, do not forget that there are exceptions (they are not taxed).

Tax rate

The VAT rate is 22%. However, reduced rates apply to some categories of goods and services:

• 9% – for food products, books, medicines and other socially significant goods;
• 5% — for dormitories, passenger transportation and some medical services;
• 0% — for the export of goods and services outside the European Union.

It is necessary to consider each case specifically in order to say exactly what interest rate it is eligible for.

Calculation and refund of VAT

A refund of overpaid VAT is possible in cases stipulated by law. According to Article 29 of the Tax Code, taxpayers have the right to apply for a tax refund if the deduction amount exceeds the accrued tax amount.

The procedure for filing an application for a refund is regulated by Articles 31–32 of the Tax Code and includes the following steps:

1. Preparation of a VAT declaration.
2. Submission of the declaration to the tax authority.
3. Verification of the declaration by the tax authority.
4. Making a decision on a tax refund.

After this, the tax authority will contact the applicant and inform them of the decision.

Tax refund period

The tax refund period is set by Article 33 of the Tax Law and is 90 days from the date of filing the declaration. If the tax authority does not make a decision within the specified period, the taxpayer is paid interest for each day of delay.

Conclusion

The calculation and refund of VAT in Estonia is regulated by the VAT Act and the relevant regulations of the Ministry of Finance. It is important to correctly determine the tax base, apply the appropriate rates and follow the procedure for filing applications for the refund of overpaid amounts.