Important changes are taking place in Estonian tax legislation from 2024. If you are doing business in Estonia, here are the key points to pay attention to:
- Changing the VAT rate: From the beginning of 2024, the standard rate of the VAT will increase from 20% to 22%. This means that your goods and services that were previously taxed at the standard rate will now be taxed at a higher rate.
- Transitional provisions for the cash basis of accounting for VAT: If you use the cash method of accounting for VAT, you will be able to apply the old 20% rate until the end of 2025 for income received after December 31, 2023. This is relevant if you issued an invoice and shipped goods or provided a service before January 1, 2024.
- Special conditions for long-term contracts: For transactions involving long-term contracts (e.g. real estate), you can continue to use the 20% rate until the end of 2025. This applies to contracts entered into before May 1, 2023, if they include a VAT rate clause.
- Minimum wage and social tax: Don't forget that the minimum wage under a labor contract is now 820 euros. In addition, the basic amount for calculating social tax has increased to 725 euros per month.