Taxation of services - AMS Group

Taxation of services

In this article we will look at what types of services there are, who can be served and how to understand what VAT rate to choose when creating an invoice for your client in Nola Accounting.

What kinds of services are there?

Intangible services are services that are intangible in nature, i.e. they are not connected in any way with goods. These include advertising services, software development services, various consulting services, accounting services, legal services, etc.

Digital services are services related to a digital product for which, once the product has been developed, no employees are needed. This includes various subscriptions to online services (SaaS), access to online courses, photos, books, and other information.

Financial Services

Freight services

Mediation Services

Vehicle rental

Services related to a chattel

Restaurant services

Passenger transportation services

Services related to culture, art, sports, education, science, entertainment or event

Real estate services

Regular services - all other services not included in the list above.

To whom can services be provided?

Services can be provided to businesses or individuals.

Services can be provided by companies and individuals from Estonia, from the European Union and from other countries. For taxation, based on the Estonian Sales Tax Act, it is the geographical division that matters.

When providing services to legal persons from Estonia and the EU, the presence or absence of a VAT number also plays a role.

The VAT number must be valid and checked against this European database:

How to understand what rate of VAT to choose when selling?

To understand which VAT rate to choose when selling a service, you need to answer two questions:

  1. What kind of service is provided?
  2. To whom is the service rendered?

To make this process easier, we've created an interactive guide to help you understand what tax rate you should put on your invoice when selling your services.

NB! At this time, only the following types of services have been added to the interactive guide: regular, intangible and digital services.

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