In recent years, Estonia has become a focal point for entrepreneurs looking to establish and manage companies remotely within the EU, thanks to both its e-residency program and digital tax infrastructure. At this point, one of the most critical questions is: Can a VAT number really be obtained in Estonia, who is required to obtain it, and how are tax rules changing as we approach 2026?
Can a VAT number be obtained in Estonia?
Yes, a VAT number can be obtained in Estonia and is mandatory in many cases. Businesses, both resident and non-resident, that provide taxable goods or services in Estonia are required to register for VAT with the Estonian Tax and Customs Board under certain conditions.
The format of the Estonian VAT number is fixed:
- Country code: EE
- Followed by: 9 digits (total of 11 characters: e.g., EE123456789)
The application usually concludes within approximately 5 business days, and once obtained, you can use the number for both trade within Estonia and within the EU.
Who is required to obtain a VAT number in Estonia?
According to the 2025–2026 legislation, the obligation to register for VAT must be examined along two main axes: threshold-based registration and threshold-less (direct) registration.
1. Businesses exceeding the €40,000 threshold
The basic VAT registration threshold for both resident and non-resident businesses in Estonia is €40,000 annual turnover. This limit is calculated based on taxable supplies made in Estonia within a calendar year.
VAT registration becomes mandatory in the following situation:
- If your taxable turnover within a calendar year exceeds €40,000,
- You must apply to the Estonian tax authority within 3 business days from the date this threshold is exceeded.
Missing this deadline carries the risk of back assessments, late fees, and penalties.
2. Foreign persons without a permanent establishment
The rule is stricter for foreign persons or companies without a permanent establishment in Estonia. If you are providing a taxable supply or service in Estonia that does not fall under reverse charge,
In summary: Even if you do not have a physical presence in Estonia, a poorly structured business model can quickly lead to VAT liability.
Important change for 2025–2026: Rule against deregistration
One of the most critical regulations introduced by the 2025–2026 tax legislation concerns the deregistration of VAT taxpayers. According to the new rule:
- If a person (natural or legal) has exceeded the €40,000 threshold in both the current calendar year and the previous calendar year,
- This taxpayer cannot be removed from the VAT register until all deregistration conditions are fully met.
This means Estonia is limiting businesses that frequently “exit and re-enter” VAT with short-term fluctuations. Those with long-term commercial activities are seeing their VAT obligations become more permanent.
As we approach 2026, VAT rates and current tax rates
Estonia has updated VAT rates due to budget needs and EU compliance for the 2025–2026 period. According to the legislation:
- As of July 1, 2025, the standard VAT rate will increase from 22% to 24%.
- The reduced rate for certain items such as books, medicines, and accommodation will rise from 9% to 13%.
Additionally, a transition exception has been granted for businesses using cash accounting:
- These businesses may continue to apply the 9% VAT rate on accommodation services until December 31, 2026.
This temporary regulation is primarily a support mechanism aimed at maintaining cash flow in the tourism and accommodation sector.
2025–2026: How will the threshold be calculated?
The new legislation introduces significant changes in the calculation of the €40,000 threshold that triggers VAT liability. Now:
- Only supplies made in Estonia are included in the threshold calculation.
- Regular (non-occasional) turnover from insurance and financial services is included.
- Turnover from the use or sale of real estate, if it is continuous, is included in the threshold calculation.
- Sales of fixed assets and sales of investment properties are not included in the threshold.
These distinctions redefine when VAT liability arises, especially for companies with real estate development, financial services, or mixed revenue models.
Innovation for businesses using the margin accounting system
In Estonia, businesses operating with a margin accounting system for second-hand goods or certain sectors must now account for the threshold as follows:
- The threshold is calculated based on all amounts received or receivable for goods and services, not just on the “margin”.
This change may cause some businesses to face VAT liability sooner than expected. Therefore, it is important to review turnover projections and contract structures.
New business type: Online marketplace owners
With the 2025–2026 legislation, a new category directly impacting e-commerce and the platform economy has been defined: online marketplace owner.
According to the new regulations:
- Online marketplace owners that enable non-taxable persons outside the EU to sell goods to taxable persons in the EU (B2C customers),
- Must register as VAT taxpayers as soon as taxable supplies arise from these sales.
- Additionally, these platform owners are held responsible for fulfilling VAT obligations on behalf of non-EU sellers, even if they remain below the €40,000 threshold.
This means Estonia is clearly reflecting the approach of treating “the platform as a tax intermediary” in its legislation. Misconfiguration in international marketplace models can pose serious tax risks to the platform owner.
New special regime for small businesses
With the aim of supporting SMEs across the EU, Estonia has introduced a special VAT regime for small businesses during the 2025–2026 period. According to this regime:
- If the total annual turnover in Estonia is below €100,000,
- If the turnover in no other EU member state exceeds that country’s VAT registration threshold,
- The business may benefit from VAT exemption under certain conditions, regardless of the €40,000 national threshold in Estonia.
This regime aims to relieve service providers and micro-enterprises that operate solely in Estonia and work with modest volumes. However, e-commerce businesses selling in other EU countries must still monitor each country’s thresholds separately.
VAT registration application process in Estonia: Step by step
Although the Estonian tax system is quite digitalized, the process still contains many legal and technical details, especially for foreign companies. Generally, VAT registration proceeds as follows:
Required documents
The essential documents you need to submit to the Estonian Tax and Customs Board for VAT registration are:
- Completed VAT registration application forms,
- A copy of the company’s articles of association,
- A current registration extract from the trade register in Estonia or the relevant country,
- If available, a VAT certificate from the home country,
- Evidence of taxable activities to be conducted in Estonia (contracts, business plans, proposal letters, etc.).
Requirement for a fiscal representative for non-EU companies
Non-EU companies are required to appoint a fiscal representative when registering for VAT in Estonia. This representative:
- Monitors VAT obligations, declarations, and payments in Estonia,
- Assumes joint liability with the company in the eyes of the tax authority.
The application can be submitted to the Estonian Tax and Customs Board via email or in writing (by post). Thanks to Estonia’s e-government infrastructure, the process is completed remotely in most cases; however, it is critical to prepare the documents accurately and consistently.
Approval time and subsequent considerations
After your application is received, the tax authority usually conducts a review within 5 business days. Once approved, your company will be assigned a VAT number starting with EE.
After that:
- You must use this number in the correct format on invoices and contracts,
- You must submit VAT returns at the specified frequency (usually monthly),
- You must keep records and documents for the duration specified by the legislation.
What mistakes do companies make when obtaining a VAT number in Estonia?
Based on what we see from our international clients and examples in the market, the main risks are as follows:
- Incorrectly calculating the threshold: Confusing supplies made in Estonia with overall EU turnover or including sales of fixed assets in the calculation.
- Registering from the wrong entity: Opening registration on the wrong side when the platform owner is the VAT taxpayer or vice versa.
- Not appointing a representative for non-EU companies: Initiating transactions without a fiscal representative or a properly executed contract.
- Neglecting intra-group transactions: Conducting services and licensing between group companies “off-invoice” and facing collective risk later.
Why is it important to structure the VAT system correctly in Estonia?
Since Estonia is an EU member, a poorly structured VAT strategy creates risks not only in Estonia but also in other EU countries. For example:
- If liability is on the wrong side of your marketplace model, millions of € in back VAT,
- If you register late due to incorrect threshold calculation, late fees and penalties,
- If you operate as a non-EU company without a representative, registration rejection and trade restrictions.
These are some of the potential consequences you may face.
How can Corpenza support you in this process?
Corpenza works with a team of experts in the fields of company formation in Europe, VAT registration, international accounting, payroll (EOR), personnel leasing with posted worker models, and investment-based residency/citizenship.
Specifically for Estonia:
- Company formation and integration into the Estonian e-government system,
- Analyzing whether there is a VAT registration obligation, correctly calculating the threshold according to 2025–2026 legislation,
- Planning and structuring fiscal representation for non-EU companies,
- Structuring the triangle of platform-seller-customer correctly from a tax perspective in online marketplace and SaaS models,
- Conducting international accounting and monthly VAT declarations in compliance with Estonian tax authorities.
We provide a comprehensive service in these areas.
Especially if you are selling in multiple EU countries, designing your Estonian VAT structure together with OSS, IOSS, and other EU VAT regimes provides significant long-term tax optimization and compliance ease.
Conclusion: Obtaining a VAT number in Estonia is a strategic decision as we approach 2026
In summary:
- Obtaining a VAT number in Estonia is both possible and mandatory in many cases.
- While the basic threshold is €40,000, foreigners without a permanent establishment and online marketplace owners may need to register regardless of the threshold.
- With the changes in 2025–2026, threshold calculation, reduced rates, small business regime, and rules against deregistration have been significantly updated.
- A faulty configuration can create high tax risks not only in Estonia but across all your EU trade.
Therefore, when considering obtaining a VAT number in Estonia, it is important to address your company structure, business model, and target markets together and seek support from a professional team if possible.
Important disclaimer
The information contained in this text is for general informational purposes only. It should not be considered legal, tax, or financial advice. Tax legislation changes frequently; the 2025–2026 Estonian tax regulations are also subject to updates.
Before taking any action, we recommend checking the current regulations from official sources, primarily the Estonian Tax and Customs Board, and obtaining professional advice tailored to your specific situation.
