The UK online seller with an Estonian company

What does an Estonian VAT registration involve?

An Estonian company registered for VAT charges and reclaims Estonian VAT and files a return. The standard rate has been 24% since 1 July 2025, and the registration threshold is 40,000 EUR. The VAT return (KMD) is due by the 20th of the following month. In plain terms, every month you tell the Tax Board how much VAT you charged and how much you paid, and you settle the difference. This applies every month, including months with little or no activity.

Registration is a legal status with a monthly calendar attached. Missing the 20th has consequences, so someone needs to be responsible for the cycle. We take that on. See the Estonian VAT guide and our VAT registration and returns service.

What do the Estonian books need each month?

An online seller has data in many places. To close a month, we need:

• sales reports from each storefront or marketplace, with the matching payout statements,
• payment processor statements, including fees and refunds,
• supplier and stock invoices, and the cost of shipping and fulfilment,
• advertising invoices and subscriptions,
• bank statements for every account the company uses,
• any customs or import documents connected with the goods.

We reconcile sales to payouts and payouts to the bank, so the VAT return is based on the books and not the other way round. The regular work is covered by e-commerce accounting, OSS and IOSS.

Refunds, chargebacks and marketplace fees are where online books most often go wrong. A payout rarely equals the sales it covers. So before we post anything, we split each payout into the sales, fees, refunds and reserves behind it. If you sell in more than one currency, we record the rate used for each transaction. That way your accountant or an auditor can trace the figures back to the source report.

How are OSS and IOSS handled?

Where your Estonian VAT registration brings OSS or IOSS reporting, we prepare and submit those returns as part of the monthly work. OSS and IOSS (One Stop Shop and Import One Stop Shop) are EU schemes for reporting VAT on certain cross-border sales to consumers in one return. They are Estonian obligations of the Estonian company. Which scheme applies depends on what you sell, where the goods ship from and to, and who the customer is. We confirm this with you at the start rather than assume it.

We do not state thresholds for these schemes here. Once we have seen your sales flows, we will set out what applies to them. For costs, see our article on e-commerce cost, tax and VAT in Estonia.

Post-Brexit questions for your UK adviser

Selling from an Estonian company into or out of the UK raises questions that we do not answer. Please put these to your UK accountant:

1. Does the Estonian company need to register for UK VAT, and on what basis?
2. How is VAT or import duty handled on goods shipped to UK customers?
3. Does the company have a UK taxable presence because of where you work, store goods or hold stock?
4. Is the company UK tax resident because its central management and control is in the UK?
5. Could the UK controlled foreign company rules reach its profits?

Does the residence question apply to online sellers?

Yes. A company incorporated elsewhere is also UK tax resident if its central management and control is exercised in the UK. For an online business run from a UK desk, this question comes before any VAT detail. Our article on where an Estonian company is actually taxed explains why registration alone does not settle it.

Before you rely on the Estonian company

Three questions help show whether the Estonian company is doing real work for your business. Where are the goods held and shipped from? Who decides pricing, stock and suppliers, and from which country? Would the company still be Estonian if the tax rate were the same everywhere? If the answers all point to the UK, raise this with your UK adviser before the first Estonian return is filed. We would rather discuss it now than keep books for a structure that does not hold up.

Annual report and year end

The Estonian annual report is due by 30 June. For a seller, it needs a clean stock position, reconciled marketplace balances and a record of each currency used. If earlier months were not kept, catch-up bookkeeping brings the books up to date first. We then prepare the report through our annual report filing service.

How we work with your UK accountant

We agree the chart of accounts, reporting format and closing dates with your accountant, so the Estonian company fits cleanly into your group or management accounts. We deliver the monthly pack in the format they ask for, and your auditor can have the ledger and supporting documents.