Generally, a non-resident company has to register for VAT in Estonia when it has taxable activity in Estonia. This activity can be any of the following:
- Estonian domestic sales of goods for which the non-resident company is liable to pay the VAT due (i.e., situations where the reverse-charge mechanism is not applicable);
- Distance sales of goods (mail order sales to Estonian individuals) provided the annual threshold of EUR 35,000 in sales is exceeded;
- Intra-Community supplies of goods: Sales whereby goods are dispatched from Estonia to the other EU Member States;
- Intra-Community acquisitions of goods: Bringing goods from other EU Member States into Estonia;
- Exports of goods: Sale where goods are dispatched from Estonia to countries outside of the EU;
- Imports of goods: Bringing goods from outside the EU into Estonia; and
- Supplies of services that are located in Estonia according to the VAT rules (provided the reverse charge mechanism is not applicable).
Besides the above-mentioned threshold of EUR 35,000 for the specific case of distance sales, there is no minimum threshold for non-established companies. Regardless of their size, the above transactions normally require a non-established company to register for VAT in Estonia.
Estonia has introduced a reverse-charge system for all domestic supplies of goods and services by non-resident companies. When non-resident companies without a VAT registration number in Estonia invoice VAT-registered taxable persons for locally supplied goods or services in Estonia, the Estonian VAT due on the domestic transaction is shifted to the customer, who self-assesses this VAT in his Estonian VAT return. If the customer is not registered for VAT purposes in Estonia, the non-resident company is required to register for VAT in Estonia. If the non-resident supplier is VAT-registered in Estonia, the reverse-charge mechanism will not apply and he will have to charge VAT on the local supply.
Consequently, if a non-resident company performs only domestic supplies of goods or services in Estonia, it can entirely avoid VAT registration in Estonia. However, if other transactions occur (other than intangible services that are also subject to a reverse charge), VAT registration is required to declare these other transactions (such as intra-community supplies, intra-community acquisitions, exports, imports, and the purchase of services subject to the reverse-charge mechanism).