VAT in Estonia for IT companies
Greetings
In continuation of the article about the registration of a tax-free company in Estonia, I want to share with you information related to VAT (Value-added tax is an analogue of our VAT).
If you have registered, or are planning to register a company in Estonia for IT business, namely for the provision of services , you are most likely to think about the question: "Do I need a VAT number?"
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Based on the practice and communication with my clients , I can tell you that you are not the only one who is looking for the answer to this question.
Given this fact, I will try to give a public answer to this question here, on the "Megamind".
Useful information for those who hears about VAT for the first time, or is not sure that he understands correctly what it is:
So, what is VAT can be read in Wikipedia .
More specifically, EU VAT can also be read on Wikipedia .
What is the VAT number (synonymous with VAT ID) can be seen here .
Today, practice in Estonia shows that you will not receive a VAT number if:
And if you get through tricks, for example, buy a ready-made company with a VAT number, you can pick it up on the grounds mentioned above, or if you:
But do not be in a hurry to get upset, since you can work with your counterparties and without a VAT number.
According to the general rule approved by COUNCIL DIRECTIVE 2006/112 / EC on the export of services from the territory of the European Union, EU VAT is not applied. According to this Directive, the place of service is the place of registration of the customer.
That is, the sale of IT services by a company registered in Estonia for the territory of the Eurozone is not subject to VAT and receipt of the VAT number is not mandatory.
Now let's understand the need to get a VAT number when selling IT services by a company registered in Estonia to customers registered in the European Union (but not in Estonia):
According to clause 1, paragraph 19 of the Estonian Value-Added Tax Act , you are exempt from receiving a VAT number on such sales.
The existing limit of 16,000 euros per year within which you can conduct business without obtaining a VAT number does not apply.
And finally, if your company and your customer are registered in Estonia, then after reaching the income limit in the territory of Estonia at 16,000 euros per year, you will be required to receive a VAT number.
Simulate situations:
So, let's assume that you have registered a company in Estonia and are engaged in software development for external customers (outsourcing).
The team of developers in Ukraine, Belarus, Russia.
Customers have legal entities in:
USA, Canada, Latin America, Asia, Offshore
You invoice without VAT.
You are not required to receive a VAT number in Estonia.
UK, EU (but not Estonia)
You invoice without VAT.
You are not required to receive a VAT number in Estonia.
Estonia
Up to 16,000 euros per year, you are entitled to invoice without VAT and not receive a VAT number.
After reaching the limit, you must obtain a VAT number.
Before reaching the limit, you invoice without VAT.
Regarding payments to the team of money for their local IP (in Ukraine - FOP):
Such payments are not subject to taxation by Estonian (European) VAT.
Conclusion:
If you have an Estonian company, you can provide services (for example, outsourcing) without obtaining a VAT number to customers from all over the world, except Estonia, as there is a limit on turnover of 16,000 euros per year.
I hope the article will be useful to you!
PS: Please let me know that you are interested in the content, and in the future I will write a general article on European VAT (on goods and services), and not specifically on Estonian VAT, which arises or does not arise during the provision of services.
In continuation of the article about the registration of a tax-free company in Estonia, I want to share with you information related to VAT (Value-added tax is an analogue of our VAT).
If you have registered, or are planning to register a company in Estonia for IT business, namely for the provision of services , you are most likely to think about the question: "Do I need a VAT number?"
')
Based on the practice and communication with my clients , I can tell you that you are not the only one who is looking for the answer to this question.
Given this fact, I will try to give a public answer to this question here, on the "Megamind".
Useful information for those who hears about VAT for the first time, or is not sure that he understands correctly what it is:
So, what is VAT can be read in Wikipedia .
More specifically, EU VAT can also be read on Wikipedia .
What is the VAT number (synonymous with VAT ID) can be seen here .
Today, practice in Estonia shows that you will not receive a VAT number if:
- You are not a resident of Estonia or at least the EU ( * unofficial source )
- You do not do business in Estonia (real office and employees)
- You do not have taxable VAT turnover in Estonia (you must have real transactions with counterparties from Estonia)
And if you get through tricks, for example, buy a ready-made company with a VAT number, you can pick it up on the grounds mentioned above, or if you:
- will not submit monthly VAT returns.
- will not file monthly wage returns
- You will submit the declarations specified in clauses "a" and "b", but zero.
But do not be in a hurry to get upset, since you can work with your counterparties and without a VAT number.
According to the general rule approved by COUNCIL DIRECTIVE 2006/112 / EC on the export of services from the territory of the European Union, EU VAT is not applied. According to this Directive, the place of service is the place of registration of the customer.
That is, the sale of IT services by a company registered in Estonia for the territory of the Eurozone is not subject to VAT and receipt of the VAT number is not mandatory.
Now let's understand the need to get a VAT number when selling IT services by a company registered in Estonia to customers registered in the European Union (but not in Estonia):
According to clause 1, paragraph 19 of the Estonian Value-Added Tax Act , you are exempt from receiving a VAT number on such sales.
The existing limit of 16,000 euros per year within which you can conduct business without obtaining a VAT number does not apply.
And finally, if your company and your customer are registered in Estonia, then after reaching the income limit in the territory of Estonia at 16,000 euros per year, you will be required to receive a VAT number.
Simulate situations:
So, let's assume that you have registered a company in Estonia and are engaged in software development for external customers (outsourcing).
The team of developers in Ukraine, Belarus, Russia.
Customers have legal entities in:
- USA, Canada, Latin America, Asia, Offshore.
- UK, EU (but not in Estonia).
- Estonia.
USA, Canada, Latin America, Asia, Offshore
You invoice without VAT.
You are not required to receive a VAT number in Estonia.
UK, EU (but not Estonia)
You invoice without VAT.
You are not required to receive a VAT number in Estonia.
Estonia
Up to 16,000 euros per year, you are entitled to invoice without VAT and not receive a VAT number.
After reaching the limit, you must obtain a VAT number.
Before reaching the limit, you invoice without VAT.
Regarding payments to the team of money for their local IP (in Ukraine - FOP):
Such payments are not subject to taxation by Estonian (European) VAT.
Conclusion:
If you have an Estonian company, you can provide services (for example, outsourcing) without obtaining a VAT number to customers from all over the world, except Estonia, as there is a limit on turnover of 16,000 euros per year.
I hope the article will be useful to you!
PS: Please let me know that you are interested in the content, and in the future I will write a general article on European VAT (on goods and services), and not specifically on Estonian VAT, which arises or does not arise during the provision of services.
Source: https://habr.com/ru/post/290672/
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