Regulatory updates - Estonia

On December 3, 2024, the Ministry of Finance submitted the proposals and unveiled the intention to develop the bill for amending the VAT Act.

The Ministry is considering:

- the abolishment of the 1,000 EUR threshold for declaring transactions[1] and

- the introduction of mandatory e-invoicing for all VAT-subjected B2B transactions.

The bill expected to be drafted in 2025 might come into effect in 2027.

In the meantime, as previously reported by Pagero, all businesses registered as e-invoice receivers in the business register (including all public sector entities) will be able to require suppliers to submit machine-readable electronic invoices starting July 1, 2025.

To sum up, the extension of e-invoicing requirements entering into force from July 1, 2025 is still in force, whereas the Ministry proposed to roll out mandatory e-invoicing from 2027. 

Pagero closely monitors these developments and will continue notifying our customers about the latest changes.

[1] Currently, VAT declarations KMD and an Annex KMD INF listing all sales and purchase invoices with domestic counterparties exceeding 1,000 EUR in one month must be declared on KMD INF.

On 18 September 2024, the Estonian Parliament passed amendments to the Accounting Act. The only change after Pagero’s previous update is a revised timeline, with the implementation now set to commence on 1 July 2025.

Starting 1 July 2025, all businesses registered as e-invoice receivers in the business register (including all public sector entities) will be able to require suppliers to submit machine-readable electronic invoices.

According to the ultimately approved version of these amendments:

• The company can now do its registration and not only by its e-invoice operator;
• The parties are allowed to agree upon any invoice format;
• If no particular format is agreed upon, the European e-invoice standard format (EN 16931) becomes the required format.

On 2 May 2024, the Government of Estonia approved the amendments to the Accounting Act introduced by the Ministry of Finance to use e-invoices for business transactions. This Act aims to standardize and simplify the e-invoicing formalization requirements. 

Starting from January 2025, all businesses registered as e-invoice receivers in the business register (including all public sector entities) will be able to require suppliers to submit a machine-readable e-invoice. 

The transaction partners will agree on the original document's format and submission terms. However, the obligation to use the European e-invoice (EN 16931) standard exists by default if the buyer requires the seller to submit an e-invoice and the parties have not agreed on another format. 

The Ministry of Finance of Estonia has previously proposed to amend the provisions of the Accounting Act by introducing the use of e-invoices in business transactions.

The proposal considers allowance for the buyers to demand e-invoices compliant with EN 16931 format from their suppliers within B2B transactions.

This draft law will be implemented presumably after 2025, as the proposed amendments to the Accounting Act have not been adopted yet.

The Act makes Estonia yet another European country to go beyond the requirements on Directive 2014/55/EU and extend the e-invoicing mandate as well on suppliers.

The timelines of the mandates will be as follows:

• From April 2019: all contracting authorities are obliged to be able to receive e-invoices that comply with the European Norm
• From July 2019: all invoices to the public sector can only be sent as e-invoices compatible with the European Norm

The Estonian Center of Registers and Information Systems (RIK) maintains the government-owned infrastructure (e-Financials) that performs the service of receiving and sending e-invoices and accompanying documents between suppliers and public contracting authorities. RIK will be accepting e-invoices that comply with EN 16931-1, i.e. UBL 2.1 or CII and the Official Estonian e-invoice standard EVS 923: 2014 / AC: 2017

Companies and institutions can use the state register “Register of E-Invoice Recipients”, where all organisations receiving e-invoices (business and non-profit associations, foundations and state and local government agencies) are registered. The register lists all necessary information to electronically transmit invoices to registered companies/institutions.

Estonia’s approach to e-invoicing is however decentralised, whereby contracting authorities can contract an e-invoicing service provider of their choosing to receive e-invoices compatible with the European Norm instead of being connected to the central platform.

Pagero offers the necessary network reach to exchange e-invoices with the Estonian public sector.