Estonian VAT Update: New VAT Rate 22%

The year 2024 is on the horizon, bringing changes to the calculation of VAT in Estonia.

In the following article, we cover topics that administrators of Envoice accounts for Estonian registered companies should consider adjusting, as well as aspects to pay attention to in the near future.

Setting up Tax Rates

The configuration of VAT codes depends on the integration of your company’s Envoice account with your accounting software.

If your accounting software is SmartAccounts, Merit Aktiva, ERPLY Books, Microsoft Dynamics 365 Business Central, Xero, QuickBooks Online, or any other fully integrated accounting software, you need to create new VAT codes in your accounting software. It’s possible that these new codes have already been created by the software provider and do not need manual creation. The new codes will be automatically synchronized with Envoice and are ready for use.

If you use Standard Books, Directo, SimplBooks, PMen, or SAF for accounting, you must first create new VAT codes in your accounting software and then configure them in Envoice. To do this, go to Settings > Bookkeeping > Tax Rates, and click “Add New.” Fill in the required fields and use the same code in the “Code” field that you have created in your accounting software. Save the changes, and the new Tax Rate is ready for use.

Envoice Automation Tools

In general, Envoice does not allow preconfiguring the tax code used on purchase invoices. Envoice attempts to find the most suitable code based on the tax rate used on the invoice. However, the recording assistant SmartRecord has learned to find the correct code based on your usage pattern. Therefore, with the new VAT rates, there may be cases where SmartRecord does not automatically select the VAT code for invoices. In such cases, please manually assign the correct code to “teach” SmartRecord again. On subsequent invoices from the same supplier, SmartRecord will be able to find the correct code automatically.

For Merit Aktiva users: Since the VAT codes for reverse taxation and VAT on metal taxation are solved between Envoice and Aktiva through a special technical solution, please ensure that the correct code is used on reverse taxation and metal invoices.

VAT Rules on Sales Invoices

If you also use the Envoice environment for creating sales invoices, you need to make some settings to use the new tax rate on sales invoices.

Once you have configured or synchronized the new VAT codes in Envoice, you need to create rules for using them on sales invoices. To do this, open the code you want to use on sales invoices, click “Add Line” in the VAT rules for sales invoices section, fill in the necessary fields, and save.

Validity of the 20% rate until 2026

Since the 20% rate applies in special cases until 2026, please do not delete the 20% codes so that they can be used in exceptional cases in the future. There may also be a need to categorize invoices from 2023 that may arrive after January 1, 2024.

Attention:

• Changes to Envoice account settings can only be made by users with Administrator rights on the company account.
• If you manage multiple Envoice accounts, you must make the necessary changes on all company accounts.

If you feel that some topics have been left uncovered in this article, please send your questions to support@envoice.eu. We will update this article with new topics if needed.

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