In short: the obligation to register arises at €40,000 of turnover, but sometimes it pays to register voluntarily earlier. The main reason is that you can then reclaim the VAT paid on purchases (input VAT). It isn't beneficial for everyone, though.
Last updated: 16 October 2026. Tax rates may change; before making a bigger decision, check the latest information from the Tax and Customs Board or ask us.
When does voluntary registration make sense?
- You're making large investments before sales start: equipment, computers, a production line or stock.
- Your clients are mainly VAT-registered businesses, for whom VAT doesn't increase the final price.
- Many of your expenses are purchases that include VAT.
- You sell abroad or at the 0% rate, but you have costs related to taxable activity in Estonia.
When isn't it beneficial?
- Your clients are mainly private individuals and you can't raise the final price.
- Your main cost is your own work and there's little input VAT.
- Monthly VAT returns (KMD) and VAT invoice requirements would create a disproportionate amount of work.
Example: how VAT affects the price
Suppose your service currently costs €100.
| Situation | What happens |
|---|---|
| The client is a business | The invoice is €100 + €24 VAT. The client deducts the VAT, so their real cost stays €100. |
| The client is a private individual and you raise the price | Final price €124, your net income stays €100. |
| The client is a private individual and the price stays €100 | Your sales revenue is €80.65 and €19.35 goes to VAT. |
So think through your pricing strategy before registering.
What do you need to prove when registering?
When registering voluntarily, you need to prove to the Tax and Customs Board that you are running a business or starting one. Suitable evidence includes contracts, quotes, purchase invoices, a business plan or a website. A new OÜ can be registered for VAT already at the time of founding in the company registration portal.
Input VAT isn't an automatic refund
You can only deduct VAT on business-related purchases if the purchase is linked to taxable supplies and documented with a proper invoice. There are restrictions, for example, for passenger cars, entertainment expenses and employee catering.
Frequently asked questions
After registering voluntarily, do I have to submit a VAT return every month?
Yes. The VAT return (KMD) must be submitted by the 20th of every month, even if there was no turnover.
Can I deregister later?
Yes, if turnover hasn't exceeded €40,000 in the current or previous year and won't exceed it in the next 12 months either.
Where can I find the rules for mandatory registration?
Read our post when to register a company for VAT.
Does it pay for your company to register?
During a free introductory call, we'll work out whether voluntary registration is beneficial for you.
Sources: Tax and Customs Board, eesti.ee.