Taxation of goods

Here we give an overview of the place of supply of goods and the taxation of domestic transactions and acts, export and import of goods, and intra-Community supply and acquisition. Under the VAT Act, there are also a number of differences in the taxation of supply of goods, e.g. the supply of goods to be installed or assembled, new means of transport, etc. are taxed differently from the supply of other goods.

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Recording changes in the taxable value of imported goods in the VAT return if the customs return is not amended

Pursuant to subsection 2 of § 35 of the Customs Act, a customs declaration may be amended if due to an error in the declared information the following has changed:

  1. the indicated quantity of the goods is by at least 1,000 kg or the customs value is by at least 1,000 euros;
  2. the amount of the customs duty;
  3. the amount of the excise duty;
  4. the amount of the value added tax and the person on whose behalf the declaration was lodged is not a person liable to value added tax in Estonia.

If no amendments are made to the customs declaration, the difference between the actual taxable value of the imported goods and the taxable value declared on the customs declaration must be declared by the taxable persons in the VAT return.

Under Regulation No 17, the differences between the taxable value are recorded in the VAT return as follows:

  1. the amount by which the taxable value of the imported goods is increased, unless amended in the customs declaration, must be indicated in field 1 or field 2 of the VAT return.
    The value added tax calculated on the said amount must be declared in field 4 of the VAT return and, in the case of goods acquired for the purposes of taxable supply, input VAT in the same amount must be deducted in fields 5 and 5.1 of the VAT return;
  2. where the taxable value of the imported goods is reduced and the taxable value is not amended in the customs declaration, the taxable person who makes use of the partial deduction of input VAT must adjust the input tax by the corresponding amount in fields 5 and 5.1 of the VAT return.

Thus, if the customs declaration is not amended and the taxable value of the imported goods increases, the changes in the taxable value of the imported goods are recorded in the VAT return. Where the taxable value of the imported goods is reduced, the input tax must be adjusted in the VAT return only if the VAT paid on the importation of the goods has been partially deducted or has not been fully deducted. If the VAT paid on the import of goods has already been fully deducted, the excess VAT is also deducted, so there is no need to adjust the input VAT.

Changes in the taxable value of imported goods which are not reflected in the customs declaration are recorded in the VAT return for the current month, i.e. in the month in which the error is detected.

Below are examples of changes in the taxable value of imported goods in a VAT return when customs declaration is not amended:

Example 1
In July 2017, the taxable value of imported goods in the amount of 575 euros was declared.
In January 2018, it became clear that the taxable value of the goods is 705 euros.
Those goods were acquired for the purposes of taxable supply. The difference between the actual taxable value of imported goods and the taxable value declared in the customs declaration (705 euros — 575 euros) must be declared in the VAT return for January 2018 as follows:
Field 1: 130 euros
Field 4: 26 euros
Field 5: 26 euros
Field 5.1: 26 euros

Example 2
In August 2017, the taxable value of imported goods in the amount of 2,000 euros was declared.
In February 2018, it became clear that the taxable value of the goods is 2,300 euros.
The goods are used for the purpose of both taxable supply and supply exempt from tax. A 60% proportion is used for the deduction of input VAT. The difference between the actual taxable value of imported goods and the taxable value declared in the customs declaration (2,300 euros — 2,000 euros) must be declared in the VAT return for February 2018 as follows:
Field 1: 300 euros
Field 4: 60 euros
Field 5: 36 euros
Field: 5.1: 36 euros


Example 3
In July 2017, the taxable value of imported goods in the amount of 5,700 euros was declared.
In March 2018, it became clear that the taxable value of goods is 5,500 euros.

3.1. Those goods were acquired for the purposes of taxable supply: The input VAT is not adjusted in the VAT return because the VAT paid on the import of goods on the basis of the customs declaration in the amount of 1140 euros has already been deducted as input VAT in the July VAT return.

3.2. Those goods were acquired for the purposes of supply exempt from tax:
The amount of VAT initially paid on the basis of the customs declaration was 1,140 euros.
In fact, VAT in the amount of 1,100 euros must be paid (5,500 euros × 20%).
As a result, 40 euros (1,140 euros — 1,100 euros) has been paid in excess VAT. Since the goods were acquired for the purpose of tax-exempt supply, the input VAT is not deducted in full.
The input VAT is adjusted (increased) by 40 euros in the March 2018 VAT return as follows:
Field 5:      40 euros
Field 5.1:   40 euros

3.3 Those goods are used for the purpose of both taxable supply (60%) and supply exempt from tax (40%):
The amount of VAT initially paid on the basis of the customs declaration was 1,140 euros.
In fact, VAT in the amount of 1,100 euros must be paid (5,500 euros × 20%).
As a result, 40 euros (1,140 euros — 1,100 euros) has been paid in excess VAT which the taxpayer is entitled to recover.
Since 60% of the VAT paid on the basis of the customs declaration (60% × 1,140 euros), including 60% of the VAT overpaid (60% × 40 euros), has been recovered on the basis of the VAT return, the excess VAT paid is refundable, i.e. 40% × 40 euros = 16 euros in the VAT return.
The input VAT is adjusted (increased) by 16 euros in the March 2018 VAT return as follows:
Field 5:       16 euros
Field 5.1:    16 euros

Last updated: 12.10.2022

Last updated: 06.09.2022

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