Accounting services for Tallinn companies

How does VAT work on services you buy from abroad?

When a foreign company sells you a service, you usually account for the Estonian VAT yourself. This is called the reverse charge.

In plain terms: the supplier does not add VAT to the invoice, so you add 24% Estonian VAT in your own VAT return. In most cases you deduct the same amount in the same return, so no money changes hands. The entry still has to be there.

For a Tallinn IT company or agency this covers many everyday bills, such as the ones below.

• Cloud hosting and software subscriptions.
• Advertising bought from large online platforms.
• Freelancers and contractors invoicing from other countries.

The VAT return (KMD) is the monthly Estonian VAT return. It is due by the 20th of the following month. Our Estonian VAT guide explains the rest of the rules.

What if you sell online to consumers in other EU countries?

If you sell to private customers in other EU countries, the One Stop Shop (OSS) lets you report that VAT in one return.

Instead of registering for VAT in each buyer's country, you file one extra return in Estonia. The Tax Board then passes the VAT on to the other countries. Our guide to the One Stop Shop schemes shows when you need it.

Payment platforms add another layer. Stripe, PayPal, Wise and similar services usually pay you the net amount, after their fees. In the books we record the full sale, the fee and the payout separately. That way your revenue and your VAT match what customers paid.

Can you run a Tallinn company from abroad?

Yes. Many Tallinn companies have founders who live in another country, and the accounting works the same way for them.

Documents reach us by email, through a shared folder or from a connected bank and invoicing system. We file the returns through the e-Tax Board (e-MTA), the Tax Board's online portal. You sign the annual report digitally with an ID card, Mobile-ID or Smart-ID.

Living abroad can raise questions in your home country, for example about a board member fee or where the company is managed from. We point these out when we see them. Our page on cross-border and board member taxation covers the usual cases.

Profit you leave in the company is taxed at 0%. When you pay a dividend, the company pays 22% on the distributed profit, which works out at 22/78 of the net dividend.