VAT rates & tax codes

Every line on an invoice or expense in Arvello carries a tax code. The code does two jobs: it sets the VAT rate for the line, and it decides where the amount lands on the KMD — the VAT return filed with EMTA, the Estonian Tax and Customs Board. Get the code right and the return assembles itself.

Tax codes in Arvello are date-aware. Estonia has changed its rates more than once recently, so the codes on offer depend on the document's date — an invoice from May 2025 calculates at 22%, one from July 2025 at 24%, and both stay correct in your books.

VAT rates as of 2026

Older documents keep their own rates: the standard rate was 22% from January 2024 to June 2025 and 20% before that, and press publications were 5% until the end of 2024.

The tax codes

The codes available for documents dated in 2026, as they appear in Arvello:

Six historic codes — Standard rate (22%), Standard rate (20%), Press publications (5%), Reverse charge, EU supplier (0%, self-assessed at 5%), Reverse charge, non-EU supplier (0%, self-assessed at 5%) and Intra-community acquisition (0%, self-assessed at 5%) — appear only for documents dated within their validity periods.

While your company is registered for the EU One-Stop Shop, four OSS codes join the sales list. They charge VAT at the rate of the customer's EU country rather than an Estonian rate — see EU One-Stop Shop (OSS). While it's registered for the EU import scheme, two IOSS codes do the same for goods sent straight from outside the EU — see EU import scheme (IOSS). An IOSS code is never a line's default: you choose it.

How a line gets its code

When you choose a client, Arvello sets a default code on every line from your VAT registration status, the client's country, VAT number validity and customer type, and the invoice date:

• Company not VAT-registered → Not subject to VAT, always
• Estonian client → the standard rate for the invoice date
• EU client with a validated VAT number → Intra-community services (0%)
• EU client without a valid VAT number → the Estonian standard rate. If your company is registered for OSS on the invoice date, a private individual, or a business with no VAT number or one VIES found invalid, gets the OSS standard-rate code for what you mainly sell instead
• Business client outside the EU → Export of services (0%)
• Private individual outside the EU → the Estonian standard rate for the invoice date

The default is only a default: every line has its own tax code dropdown, so a single invoice can mix rates — and only codes valid on the document's date are offered. Some codes add the required invoice wording automatically, such as the reverse-charge reference to Article 196 of the EU VAT Directive. Client VAT numbers come from the client record.

A private individual outside the EU starts on the standard rate because, under the VAT Act, most services sold to a consumer are taxed in Estonia, wherever the consumer lives (§ 10(1)). The services listed in § 10(5) are the exception: sold to a consumer outside the EU, they're supplied outside Estonia and take 0% (§ 15(4)(1)). The list:

• licensing intellectual property, or transferring the right to use it
• advertising
• consulting, accounting, legal, audit, engineering, translation, data processing and information services
• financial and insurance services, except that the ones § 16 exempts, such as insurance, loans and deposits, stay VAT exempt
• supplying staff
• hiring out movable property other than means of transport
• electronic communications services
• electronically supplied services, such as software downloads, apps and SaaS subscriptions
• access to gas, electricity, heating and cooling networks, and transmission through them
• transferring greenhouse gas emission allowances
• being paid to refrain from, or tolerate, any of the services above

Switch the lines for those services to Export of services (0%). A business outside the EU is different: services under the general rule are supplied where the business is, whatever they are (§ 10(4)(9)), so its lines already start on Export of services (0%). When you pick a private individual outside the EU, the invoice form shows a note naming the most common listed services.

Some services are taxed where they take place, whoever the client is. Accommodation, event admission, restaurant meals and passenger transport in Estonia, and services connected with property here, are taxed in Estonia even for a business client abroad (§ 10(2)), so those lines need an Estonian rate, or VAT exempt for letting property (§ 16).

The client's details can't tell goods from services, so a business client outside the EU starts on Export of services (0%). When a line is goods you ship out of the EU, switch it to Export of goods (0%), whoever the client is. When you sell goods and also charge for delivering or packing them, those charges are part of the goods' taxable value, so they take Export of goods (0%) too. Both codes report on KMD line 3, but only exported goods also go on line 3.2.

Northern Ireland is the exception for goods. EU VAT rules for goods still apply there, so goods you send to a private individual in Northern Ireland are an EU sale, not an export: they keep the Estonian rate, or take an OSS code if you declare EU distance sales through OSS — see EU One-Stop Shop (OSS). For services, Northern Ireland is outside the EU like the rest of the UK. A client in Northern Ireland is recorded with United Kingdom as their country, so for a private individual in the UK the invoice form's note covers both: goods shipped to Great Britain take Export of goods (0%), goods sent to Northern Ireland don't.

VAT on the invoice PDF

Lines coded VAT exempt print a § 16 marking on the invoice PDF, in the invoice's language: "VAT exempt supply (§ 16 of the Estonian VAT Act)" in English, "Maksuvaba käive (käibemaksuseaduse § 16)" in Estonian. For an exempt supply, the VAT Act asks the invoice to cite the subsection and point of § 16 that applies, or the matching article of the EU VAT Directive, and accepts a clear, unambiguous marking like this one in its place (§ 37(8) and (8¹)). To cite the exact provision as well, add it under Customer Notes.

When every line on an invoice carries the same note, it prints once below the totals. When the lines differ — exempt rent billed together with heating at 24%, for example — each note is numbered, and every line it applies to shows the number beside its VAT rate, such as 0% (1).

An invoice whose lines fall into more than one group also shows a small table above the totals. Each VAT rate (0% included) is a group, and so are exempt supplies and supplies not subject to VAT. The table lists the amount excluding VAT and the VAT for each rate, highest first, then the exempt amount and any amount not subject to VAT. The VAT Act asks for the taxable amount per rate (§ 37(7)(9)). An invoice whose lines all fall in one group shows no table, because its subtotal is already that amount.

An invoice in another currency that charges VAT also shows the VAT in euros, on its own line under the VAT total: VAT in EUR on an English invoice, Käibemaks eurodes on an Estonian one. The VAT Act asks for the VAT amount in euros whatever currency the invoice is in (§ 37(7)(10)). The figure is the one in your books: the VAT converted at the European Central Bank rate stored on the invoice. For example, a US dollar invoice with $240.00 of VAT at a rate of 1 EUR = 1.0842 USD shows VAT in EUR €221.36. A credit note in another currency shows its VAT in euros too. An invoice that charges no VAT has no euro line, because zero is the same in every currency.

What each code drives on the KMD

Line numbers are those on the KMD form in use since July 2025. On older returns, sales at the then-standard rate went on line 1: 22% from January 2024 to June 2025, and 20% before that.

The domestic rate codes also drive the KMD INF invoice annex — see Preparing a KMD return for how that's assembled and reviewed.

Reverse charge from suppliers in and outside the EU

When a foreign business that isn't registered for VAT in Estonia charges you no VAT for something taxed in Estonia — most business services, such as software or consultancy, and accommodation here — you account for the VAT yourself: the taxable value goes on the KMD line for its rate, and the same VAT is deducted on line 5. A hotel stay abroad or a ticket to a conference abroad isn't taxed in Estonia, so there's no VAT to account for on it. The return also lists the purchase on an information line, and which one depends on where the supplier is:

• Supplier in another EU country → line 6. Pick Reverse charge, EU supplier (0%) for services and Intra-community acquisition (0%) for goods.
• Supplier outside the EU → line 7. Pick Reverse charge, non-EU supplier (0%) — for a subscription to a US software service, say, or consultancy from a UK or Norwegian firm.

Line 6 is only for suppliers in other EU countries, so a service from outside the EU coded for it is on the wrong line even though the VAT adds up. A VAT return's review checklist flags such services when the supplier's contact — its country and VAT number, whichever are set — points outside the EU: ones recorded before the non-EU codes existed, for example, or created by an older recurring expense. Goods you import from outside the EU are a different case: their VAT is charged at import through the customs declaration, not under the reverse charge.

Accommodation in Estonia from a foreign business goes on line 7, whichever country the business is in. Estonia taxes accommodation at 13%, and line 6 only takes services taxed at 24% or 9%. If a foreign business that isn't registered in Estonia invoices you for a hotel stay or a flat here without VAT, pick Reverse charge, accommodation (0%, self-assessed at 13%), whether it's from inside or outside the EU. Accommodation was 9% until the end of 2024, so a stay before 2025 takes the 9% code for the supplier's region.

Two rarer purchases from EU suppliers belong on line 7 too: goods the supplier installs or assembles in Estonia, and goods you buy as the last customer in a triangular deal. Reverse charge, non-EU supplier (0%) files them there, even though the supplier is in the EU.

When a received e-invoice is marked reverse charge, Arvello picks the code from the supplier's VAT number: a number from outside the EU gets Reverse charge, non-EU supplier (0%), an Estonian one Reverse charge, Estonian supplier (0%) (see below), and any other Reverse charge, EU supplier (0%). You can change it on the draft before you approve it.

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 line the 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.