Special VAT cases

Most VAT in Arvello follows the tax code each line carries (see VAT rates & tax codes). This page covers the rarer cases with rules of their own: import VAT, property, the domestic reverse charge, the reverse charge at a reduced rate, and two kinds of 0% sale to other EU countries. It ends with what the VAT return checks for these cases, how they show in the KMD INF annex, and the KMD lines Arvello doesn't fill.

Import VAT

Import VAT you record with the code Import VAT (customs declaration) goes on line 5 and on line 5.1, the import VAT included in line 5 (see Purchase invoices). It never adds a KMD INF row.

If EMTA has allowed your company to declare import VAT on the VAT return instead of paying it at customs (VAT Act § 38(2¹)), turn on EMTA lets us, or has let us, declare import VAT on the VAT return under Settings → VAT accounting and enter the months you have it. e-MTA then fills line 4¹, the VAT payable on imports, from customs data, and you can't change it there. Arvello doesn't calculate line 4¹: copy the figure e-MTA shows into Line 4¹ from e-MTA on the VAT return's page, so the VAT payable Arvello shows matches e-MTA's. The VAT return checklist blocks approval until it's entered, and warns when it's more than the import VAT recorded on line 5.1, which means a customs declaration hasn't been recorded yet.

With this permission nothing is paid at customs: the import VAT on line 4¹ and its deduction on line 5 cancel out on the return. Arvello doesn't handle that settlement yet. It posts an Import VAT (customs declaration) document to accounts payable like any other purchase, so the document stays open as unpaid. The KMD figures are right, but the payable isn't, and Arvello has no manual journal entries to move it to VAT payable. It shows in Unpaid Expenses and the What You Owe report until Arvello can settle it.

Selling or letting property

Letting or selling property is usually VAT exempt, and two codes cover it:

• VAT exempt letting of property — letting a property or part of one (§ 16(2)(2)). Accommodation, parking, permanently installed equipment or machinery, and safes are taxed even when they come with the property.
• VAT exempt sale of property — selling a property or part of one (§ 16(2)(3)). Building land, and a new or substantially improved building sold before or within a year of its first use, must be taxed. So finalising asks you to tick The property isn't building land, and isn't a new or substantially improved building sold before or within a year of its first use. A building is substantially improved when the improvements cost at least the building's acquisition cost before them plus 10%, land excluded: for a building bought for €100,000, improvements of €110,000 or more.

A company can choose to tax the letting or the sale of property that isn't a dwelling, by notifying EMTA in writing before the supply, in the same VAT period or earlier (§ 16(3)). Record each notice in company settings. An election to tax letting binds for at least two years from its first month (§ 16(4)). While a letting election is in force, Arvello refuses VAT exempt letting of property on an invoice — charge VAT on the letting instead — and while a sale election is, it refuses VAT exempt sale of property, unless you tick This property isn't one I've opted to tax on that invoice. A property sale you opted to tax is reverse-charged when the buyer is registered for VAT in Estonia (see the next section).

Exempt sales also limit the input VAT you can deduct on purchases used for both kinds of sale — see Purchase invoices.

Selling under the domestic reverse charge

When you sell property you opted to tax, metal waste, precious metals or the listed iron and steel products to a business registered for VAT in Estonia, the buyer accounts for the VAT (§ 41¹). Code those lines Domestic reverse charge, buyer pays the VAT (§ 41¹). Finalising needs:

• the customer's Estonian VAT number in its VAT Number field, confirmed in VIES. For a foreign company registered in Estonia, that's its EE number: the invoice prints the VAT Number field, not Estonian VAT number, so a number only there isn't enough
• on each such line, the Reverse-charge goods it sells: Immovable property you opted to tax, Metal waste, Precious metals or Listed metal products
• for property, a Sale election recorded under Option to tax property in company settings

The customer pays the price without VAT. The invoice shows the reverse-charge note ("Pöördmaksustamine" on an Estonian invoice) and a breakdown row with the VAT the buyer accounts for, as § 41¹(5) requires, at the standard rate in force when the supply was made. On an invoice in another currency the row states that VAT in euros too. You declare no VAT on the sale: it goes on the information line 9 of your KMD, not line 1, and KMD INF Part A lists the invoice with exception code 02.

Buying under the domestic reverse charge

A few goods bought from another Estonian VAT-registered business are reverse-charged too (KMS § 41¹): property whose sale the seller has chosen to tax, metal waste, precious metals such as gold, and certain steel and iron products. The seller's invoice shows the VAT and says pöördmaksustamine (reverse charge), but you pay the seller the price without VAT and declare the VAT yourself. Code these lines Reverse charge, Estonian supplier (0%).

The return then lists the value on the standard-rate line and deducts the same VAT on line 5, as for any reverse charge, and reports it on the information line 7 and its subline 7.1, which is for these goods. The KMD INF annex lists the invoice in Part B, with the VAT you declared and the exception code 12, once the supplier's invoices for the month reach €1,000 excluding VAT. The arrangement only applies between two Estonian VAT-registered businesses, so an expense of a company that isn't VAT-registered can't carry this code.

Reverse charge at a reduced rate

Whichever KMD line a reverse-charged purchase goes on, you account for the VAT at the Estonian rate for what you bought. The plain Reverse charge, EU supplier (0%), Reverse charge, non-EU supplier (0%) and Intra-community acquisition (0%) codes use the standard rate of the return's period. A supplier's credit note is the exception: it takes the rate of the purchase it corrects, so a credit for a June 2025 purchase goes on line 1² at 22% even on a later return. For purchases Estonia taxes at 9% — books and e-books, medicines, and press publications from 2025 — pick the code marked self-assessed at 9%: the taxable value then goes on line 2 instead of line 1, and the VAT is worked out at 9%.

Whichever code you pick, the self-assessed VAT is part of line 4 and the same amount is deducted on line 5 of the same return, so for a company that deducts all its input VAT the two cancel out. The code decides which rate line declares the value and at what rate the VAT is worked out. Press publications were 5% from August 2022 to the end of 2024, so documents dated in that period also offer codes marked self-assessed at 5%, which go on line 2¹.

EU services exempt or zero-rated abroad

A service to a business in another EU country normally goes on KMD lines 3 and 3.1 and on the EC Sales List (VD). When the customer's country exempts the service or taxes it at 0%, it stays off the VD (§ 28(1)(2)) and goes on line 3 only. Code those lines Services to an EU business, exempt or 0% in its country.

New vehicles to other EU countries

A new means of transport, such as a new car or boat, sent to a buyer in another EU country is an intra-Community supply at 0%, even when the buyer is a private person (§ 7(1)(2)). Code those lines New means of transport to another EU country (0%). The customer has to be in another EU country. The sale goes on lines 3, 3.1 and 3.1.1, and on the VD only when the buyer has a VAT number. Attach a copy of its invoice to the VD in e-MTA (§ 28(5)); the VAT return checklist reminds you. The invoice must also show that it's new (VAT Act § 37(8)(4)): put the date it was first used and its mileage, or its operating hours for a boat or an aircraft, in the line's description.

Excise goods (alcohol, tobacco, fuel) don't use this code. Sold to a private person for personal use they're no intra-Community supply (§ 7(1)(2) leaves them out). Sold to a business with a VAT number in another EU country, they're an ordinary intra-Community supply: use Intra-community supply of goods (0%).

Checks on the VAT return

The VAT return checklist also covers the cases on this page:

• Estonian VAT from a supplier with no Estonian VAT registration — finalised expense lines at a standard or reduced rate, or Zero-rated purchase (0%, no self-assessment), from a supplier whose contact shows no Estonian VAT registration. Only a business registered for VAT in Estonia can charge VAT you deduct: from a foreign one, the purchase is reverse-charged, imported or supplied abroad (see Purchase invoices). Correct the code, or add the supplier's Estonian VAT number. This is a warning.
• Cash-based VAT accounting — a return for a month inside the cash-scheme months recorded under We use, or have used, cash-based VAT accounting (kassapõhine) in Settings → VAT accounting can't be approved: Arvello prepares accrual returns only. File those in e-MTA. After the last month, a return is refused too when a payment in its month settles an invoice issued during the scheme: that VAT is declared as it's paid (VAT Act § 44(10)).
• Suppliers on cash-based VAT accounting — an expense marked Supplier uses cash-based VAT accounting that wasn't paid in full in the month it's declared, or a payment this month for one declared in another month. Its VAT is deductible only as it's paid (VAT Act § 31(10)), which Arvello can't split yet, so this is an error that stops approval: file the month in e-MTA. See Purchase invoices.
• Partly deductible input VAT — in a year with VAT-exempt sales, every later return with input VAT warns that shared input VAT is deductible only in part; the year's first return with exempt sales and December's ask you to review the whole year's purchases. Arvello doesn't calculate the ratio: corrections go on lines 10 and 11 in e-MTA. See Purchase invoices.
• Line 4¹ — with the import VAT permission on, an error until Line 4¹ from e-MTA is entered, and a warning when it's more than the import VAT on line 5.1 (see Import VAT above). It's an error too when line 4¹ holds an amount for a month outside the permission's months: enter 0, or correct the months.
• New vehicle sold to another EU country — a reminder that a new means of transport sold to another EU country needs a copy of its invoice attached to the VD in e-MTA (VAT Act § 28(5)). Arvello's VD file can't carry it.
• Car VAT above 50% — an expense line for a car that isn't used only for business on the expense's date deducts more than 50% of its VAT (VAT Act § 30(3)), for example after the car's business-only period was changed. This is an error that stops approval. If the car was business-only then, correct its period under Expenses → Vehicles & Mileage; otherwise credit the expense in full and record it again at 50% (see Purchase invoices).

KMD INF annex

A business outside Estonia is listed in the KMD INF annex by the code EMTA's register of taxable persons gave it, entered as Estonian non-resident code on its contact: in Part A whenever it has one, in Part B only when it is also registered for VAT in Estonia: an Estonian VAT number, or an EE number as its VAT number (see Clients & suppliers). A sale under the domestic reverse charge is in Part A with the exception code 02, and a purchase under it in Part B with code 12. A purchase whose VAT you deduct only in part — a line with Business use (%) below 100, or one with a non-deductible line beside deductible ones — carries the exception code 11 and the VAT you deducted. Import VAT is never on the annex, and neither is a sales invoice marked Covered by professional secrecy (see Creating invoices). For how the annex is built and reviewed, see Preparing a KMD return.

Unsupported KMD lines

These parts of the return have no path in Arvello. If they apply to you, add them in e-MTA after uploading the KMD:

• Line 3.2.1 — exports sold tax-free to travellers.
• Reverse-charge or import VAT on a car also used privately — only 50% of it is deductible (VAT Act § 30(3)), which Arvello can't apply to those codes, so lines 5 and 5.4 need correcting in e-MTA. Other car purchases fill lines 5.3 and 5.4 from the expense's Vehicle field (see Purchase invoices).
• Lines 10 and 11 — adjustments, such as the year-end correction of partly deductible input VAT when you also make VAT-exempt sales (see Purchase invoices), or the yearly adjustment on fixed assets.
• Line 9 for goods installed in another EU country — line 9 holds only sales under the domestic reverse charge.
• Triangulation on the VD — column 4, for goods you sell on as the middle business in a triangular deal.