käibemaksukohustus

Käibemaksukohustus refers to the obligation to pay value-added tax (VAT) in Estonia. This tax is levied on the supply of goods and services. A business becomes subject to käibemaksukohustus when its taxable turnover reaches a certain threshold within a calendar year. Currently, this threshold is 40,000 euros. Once this threshold is met or exceeded, the business must register with the Estonian Tax and Customs Board as a taxable person.

Registration for käibemaksukohustus involves submitting an application to the authorities. Upon successful registration, the business is assigned a VAT identification number. This number is essential for all VAT-related transactions. The business is then required to charge VAT on its taxable supplies and to declare and remit the collected VAT to the state.

The standard VAT rate in Estonia is 20%. However, certain goods and services are subject to reduced rates, such as 9% for books, accommodation, and certain medicines, or 0% for specific exports and intra-community supplies. Businesses have the right to deduct the VAT they have paid on their own business-related purchases (input VAT) from the VAT they have charged to their customers (output VAT). The difference is what needs to be paid to the tax authorities. Failure to comply with käibemaksukohustus, including timely registration, correct declaration, and payment, can result in penalties and interest.