ettemaksed

Ettemaksed is an Estonian term for payments made in advance of delivering goods or services. The plural ettemaksed is commonly translated as prepayments or advance payments. They are used to secure a sale, reserve a service, or cover initial costs in a project.

In practice, ettemaksed appear in real estate transactions, construction contracts, event bookings, supplier arrangements, and consumer purchases. For example, a buyer may pay an ettemaks to reserve a villa, or a contractor may receive an ettemaks to begin procurement of materials.

Legal framework and terms are governed by the Estonian Law of Obligations Act, and contracts should clearly state the amount, purpose, refundability, and delivery schedule. If the seller fails to deliver, the buyer is typically entitled to a refund or damages; if the buyer cancels, refunds depend on the contract terms and applicable consumer protection rules. Consumer contracts may prohibit excessive non-refundable portions, and terms should be fair and transparent.

Accounting treatment: for the payer, ettemaksed paid for future goods or services are usually recorded as a prepaid asset. For the supplier, they are recorded as a liability until the performance occurs. When delivery or service is provided, the prepayment is recognized as revenue (or as a reduction of a payable and corresponding expense). If the contract is terminated or not fulfilled, refunds or reversal may be necessary.

Practical considerations include specifying refund conditions, documenting terms in writing, and keeping receipts. In Estonia, value-added tax (VAT) treatment follows general VAT rules; advance payments may be taxable at the time of payment or when the supply occurs, depending on the transaction.