E-Invoicing in Estonia: What You Need to Know

Electronic invoicing in Estonia is a shared responsibility between the Ministry of Finance, the Tax and Customs Board, and service providers like Unimaze.

The Ministry of Finance is in charge of developing the legal framework for e-invoicing. The Tax and Customs Board ensures compliance with e-invoicing regulations and standards.

Meanwhile, service providers offer various e-invoicing solutions to businesses, including electronic invoicing platforms and software solutions.

To comply with regulations, suppliers to the Estonian public administration are required to issue electronic invoices adhering to one of the following standards:

• European standards: UBL and UN/CEFACT, approved by Directive 2014/55/EU.
• National standard, EVS 923: 2014 / AC: 2017, based on the XML schema.

Estonia doesn’t use a central platform or hub, unlike most countries where e-invoicing is mandatory, such as France or Spain.

Electronic invoices in Baltic states are distributed to the corresponding public institutions.

In Estonia, suppliers are mandated to send electronic invoices directly to the public administration that has contracted the services. The suppliers are free to choose an e-invoicing provider of their choice.

Further, any entity billing electronically must be registered in the Center for Registries and Information Systems (RIK) under the Estonian Ministry of Justice.

The RIK manages the infrastructure to send e-invoices to the registered institutions and companies.

Who Does the Mandatory e-Invoicing in Estonia Affect?

B2G e-invoicing in Estonia is mandatory for public administrations and their suppliers. Electronic invoices can be issued in Estonia’s XML format (EVS 923:2014/AC:2017), UN/CEFACT CII, or the European UBL 2.1.

Estonia uses a decentralized framework to allow e-invoicing processing. Government agencies receive e-invoices separately instead of going through one central platform.

Service providers like Unimaze offer businesses in Estonia Peppol connection to simplify communication and create more cross-border opportunities for companies.

For mandatory B2G eInvoicing, businesses can use e-Financials for free, but only if they send electronic invoicing to the public sector.

All entities invoicing electronically must be registered with the RIK, which manages all information related to transmitting e-invoices to registered companies and institutions.

While the government doesn't recommend any specific e-invoicing service providers, there are many reasons Estonians should choose Unimaze, as discussed below.

How to Prepare for e-Invoicing in Estonia

To start sending and receiving e-invoices in Estonia, businesses and suppliers must have accounting software or ERP.

In addition, they must collaborate with a service provider like Unimaze for electronic invoice management services, including e-invoice generation.

Advantages of Choosing Unimaze Your E-invoicing Service Provider in Estonia

Unimaze e-invoicing is a robust and all-inclusive solution that revolutionizes and simplifies your AP/AR invoicing procedures.

We provide a seamless and automated document exchange with all your valued business partners and clients.

Crafted to overcome the challenges of ongoing digital transformation, our cloud-based electronic suite conforms with the latest legal regulations and modern data transfer standards.

With Unimaze e-Invoicing, every invoice you send or receive is automatically validated and converted, no matter your company's size or technical maturity.

Our solutions also boast a complete range of cutting-edge features, such as Self-Billing, e-Archive, and e-Signature, along with our extensive experience executing the most complex B2B & B2G operations.

Utilizing Unimaze for your e-invoicing needs in Estonia guarantees high-quality data assurance and a significant reduction in operational costs, allowing you to focus on other core aspects of your business.

Key Benefits

Hassle-free Payment Process

Our solution provides a streamlined and hassle-free document exchange with all your trading partners, ensuring faster time-to-payment, unparalleled quality of data, and a significant reduction in document errors.

Massive Savings for Your Operational Budget

Slash operational costs by 50 to 60% compared to paper invoicing.

Better Relationships with Your Trading Partners

Enjoy top-tier security and transparency when exchanging financial data with your trading partners. Create stronger bonds through faster payments and processing times for suppliers.

Full Compliance

We allow you to comply with mandatory e-invoicing in Estonia, the latest EU regulations, and modern data transfer standards.

What are the Invoice Requirements in Estonia?

Some key requirements for invoices in Estonia include the following:

1. Invoice date and number: The invoice should include a unique number and the date it was issued.
2. Seller and buyer details: The seller and buyer's name, address, and VAT registration number should be included.
3. Description of goods or services: The invoice should clearly describe the goods or services sold, including the quantity and price.
4. VAT amount: The amount charged should be indicated on the invoice.
5. Currency: The currency in which the transaction took place should be stated.
6. Payment terms: The invoice should indicate the payment terms, such as the due date and any discounts for early payment.

If you sell goods or services to customers in Estonia, you may be required to charge VAT (Value Added Tax) on your sales, depending on a few factors.

If you are registered for VAT in Estonia, you must charge and collect VAT on your sales to customers in Estonia.

The current standard VAT rate in Estonia is 20%. However, if your sales are subject to the reverse charge mechanism, the VAT will be accounted for by the customer, not you as the supplier.

If you are not registered for VAT in Estonia, you may still be required to charge VAT on your sales if you meet certain conditions, such as selling electronic services to consumers in Estonia.

In such cases, you would need to register for VAT in Estonia or appoint a tax representative registered for VAT in Estonia to handle your VAT obligations.

It's crucial to consult with a tax professional to ensure that you are charging the correct amount of VAT on your sales to customers in Estonia. Why? … because the rules and rates can be complex and vary depending on the nature of your business and the type of goods or services you sell.

Is Estonia a Tax Haven?

Estonia is not generally considered a tax haven. However, it does have a unique tax system that is often referred to as the Estonian model, which has some characteristics that could be attractive to businesses and entrepreneurs.

Under the Estonian model, corporate income is not taxed as long as it is retained in the company or reinvested rather than distributed as dividends. This can make it attractive for businesses to reinvest profits into growth rather than paying them out to shareholders as dividends.

However, when profits are distributed as dividends, the company and the individual receiving the dividend are subject to income tax.

While this system has attracted some businesses and entrepreneurs to Estonia, it is not generally considered a tax haven because it does not provide the same level of tax avoidance or secrecy that is often associated with true tax havens.

Additionally, Estonia is a European Union member and is subject to EU tax regulations and reporting requirements.

Do we cover this?

• Obligation

All public entities must receive and process invoices since 2017. Since 2019 all public administration suppliers with an entity in Estonia must also issue electronic invoices.

• Format

Invoices can be issued in the national XML format (EVS 923:2014/AC:2017) or the European UBL 2.1 and UN/CEFACT CII.

• Archiving

7 years.

• Tax Authority

Ministry of Finance.

• Digital Signature

Not mandatory.

E-Invoicing/CTC Model:

– B2G: Interoperability/Peppol

– B2B: Post Audit

Mandatory Infrastructure:

– B2G: RIK/Peppol or contracted service providers

– B2B: N/A

Mandatory Format:

– B2G: EN compatible formats, EVS 923:2014 and EVS 923:2014/AC:2017, PDF from foreign suppliers

– B2B: No explicit requirements

Mandatory for Issuing:

– B2G: Suppliers to all contracting authorities

– B2B: No explicit requirements

Mandatory for Receiving:

– B2G: All contracting authorities

– B2B: Buyer’s consent required

eSignature:

Not Required

Archiving Period:

7 years

Archiving Abroad:

Allowed under conditions