Starting from January 1, 2024, the standard VAT rate in Estonia is 22%, replacing the previous rate of 20%.
If a transaction occurs around the New Year’s transition from 2023 to 2024, the VAT rate is applied based on the time of the transaction—whether an advance payment is made, goods are delivered, or services are provided.
In connection with this change, a transitional provision has been established, particularly concerning long-term contracts (especially leasing agreements and transactions related to real estate): until December 31, 2025, it is permissible to apply a 20% VAT rate on the sale of taxable goods/services under a written agreement concluded before May 1, 2023. This is applicable if the contract specifies that the price of the goods/services includes VAT or if the price is subject to a 20% VAT, and the contract does not foresee a price change due to a possible change in the VAT rate.
Information related to the change in the VAT rate and examples of taxation can be found on the Tax and Customs Board website:
Link to the Tax and Customs Board website
Tax laws can be complex, and consulting with a tax advisor is recommended to obtain more precise and relevant information about your specific situation. It is advisable to consult with your accountant or tax advisor before planning future-oriented transactions.