The amendments in the EU VAT Directive (2006/112/EC) concerning the taxation of electronic communications services and electronically supplied services (hereinafter digital services) entered into force on 1 January 2019. The purpose of these amendments is to simplify the performance of the VAT obligations for small enterprises. Thereafter the Estonian Value Added Tax Act was also amended and Article 101 “Place of supply of electronic communications service and of electronically provided service provided to person who is not taxable person or taxable person with limited liability in any Member State” was added to the Act.
The amendment concerns persons liable to value added tax who are providing electronic communications services (telecommunications and broadcasting services) and electronic services to persons not liable to account for VAT who are established in other European Union Member States.
You will find the list of electronic communications and electronically supplied services (henceforth digital services or services supplied under special arrangements), the taxation of which is affected by the above mentioned amendment, in the list of digital services.
1. Determination of a customer’s actual location
As from 1 January 2015 the telecommunications, broadcasting and electronically supplied services shall be subject to taxation always in a Member State where the recipient of a supplied service is established and the tax rate applicable in this Member State shall be used.
Essentially, the taxation of services provided to persons not liable to account for VAT residing in another Member State will change, as the services provided to persons liable to VAT are currently already being taxed by the recipients of the supplied services in their Member States (reversed charge of VAT).
In this context it is important that the supplier of services determines the actual location at which the customer is established (the place of supply) and what evidence he should have to identify the location of the customer.
- About the determination of the place of supply (PDF) (Explanatory notes of the Commission on application of the Council implementation regulation no 1042/2013)
- About the VAT rates of European Union Member States
- Information on selected national VAT rules, including VAT rates and contact points
2. Special scheme for imposing value added tax on digital services or the MOSS special arrangements
According to the currently effective arrangements the supplier of digital services declares and pays VAT in its country of location if it is providing services to a person established in another Member State who is not liable to account for VAT (non-taxable person), but relating to the change in the place of supply VAT is to be paid in the customer’s country of location as from 2015.
Digital services provided to a person of another Member State who is not liable to value added tax shall not be declared in the national VAT return (KMD in Estonia) any more, but in the so-called MOSS VAT return.
In order to simplify the declaration of digital services provided in other Member States a special scheme for imposing value added tax on electronic communications and electronically supplied services or the so-called MOSS scheme (Mini One Stop Shop) has been introduced. Application of the special arrangements is described in § 43 of the Value Added Tax Act.
If the service provider wishes to supply the services under the special scheme, then it must declare and pay the value added tax calculated on the services provided to a non-taxable person established in another Member State with the tax authority of his own country of location (Member State of registration), who in its turn will remit the received amount to the tax authority of another Member State (Member State of consumption).
Consequently, any person liable to value added tax in Estonia who is providing digital services to a non-taxable person of another Member State has to choose, if:
- it will register as a person liable to value added tax and will perform the value added tax liability in the Member State where the recipient of the supplied services is established, or
- it will register as the user of MOSS special arrangements in Estonia.
The user of special scheme shall:
- submit the quarterly MOSS VAT return to the Estonian Tax and Customs Board stating the services provided to non-taxable persons established in other Member States, including the services provided from its permanent business establishment outside Estonia;
- pay the value added tax to the Estonian Tax and Customs Board, who in its turn will remit the received amount to the tax authority of another Member State.
Use of special scheme is voluntary.
Special scheme cannot be used in Member States where a person has VAT ID number, including his Member State of registration. Digital services provided in these Member States shall not be declared in the MOSS VAT return but VAT shall be paid to the tax authority of the particular Member State according to the regular rules. All persons who are registered for VAT liability in Estonia shall declare the digital services provided in Estonia (including digital services provided to non-taxable persons) in the Estonian VAT return (Form KMD).
VAT obligations shall be fulfilled according to the MOSS special scheme only in Member States where a person:
- has no VAT ID number,
- has no seat of his business, and
- has provided in this Member State digital services to non-taxable persons.
Persons who are liable to value added tax in Estonia and who wish to supply services under the MOSS special scheme have to submit the respective application to the Estonian Tax and Customs Board.
Applications can be submitted via the e-MTA by clicking on "Registers and inquiries" > "Registration" > "Registration for the use of special scheme of digital services (MOSS)".
Registration for the special scheme and submission of VAT returns is only possible in the the electronic service environment of the Estonian Tax and Customs Board (e-MTA). To log on to and use the services of the e-MTA, a citizen of non-EU has to apply for the Estonian e-resident's digital identity card.
Applying for the Estonian e-resident's digital identity card
Information on the Estonian e-residency and applying for the e-resident's digital ID-card can be found on the website of e-residency and webpage "Application for e-resident’s digital identity card".
Submission of the electronic MOSS registration application in the e-MTA
Applications can be submitted in the e-MTA by clicking on "Registers and inquiries" > "Registration" > "Registration for the use of special scheme of digital services (MOSS)".
The user of special scheme shall declare the digital services provided in the MOSS VAT return. The form of a MOSS VAT return is laid down by the Commission Implementing Regulation no 815/2012 and it is applicable in all the EU Member States.
Declaration period is a quarter of a year and the VAT return must be submitted by the 20th day of a month following the declaration period.
|Declaration period||Due date of submission of MOSS VAT return|
From 1 January to 31 March
From 1 April to 30 June
From 1 July to 30 September
From 1 October to 31 December
The first MOSS VAT return on the 1st quarter of 2015 must be filed latest by 20 April 2015.
This VAT return may be filed only electronically in the e-MTA by selecting "Taxes" > "Value added tax" > "Declaration of digital services (MOSS)".
It is not possible to submit MOSS VAT return on paper carrier.
Uploading of MOSS VAT returns from the XML file
Description of MOSS VAT return XML file
Samples of MOSS VAT return XML files
The value added tax must be paid in one of the bank accounts of the Estonian Tax and Customs Board.
The MOSS VAT return must be filed and the value added tax must be paid by the set terms (i.e. latest by the 20th day of a month following a quarter of a year) even if the due date falls on a public holiday or on a weekend. The same terms apply to the taxpayers of all EU Member States.
The payment of VAT based on MOSS declaration is done automatically from the taxpayer's prepayment account after the due date, similarly with the VAT return (from March 23, 2018).
You can also make a bank transfer using the reference number of the MOSS declaration, which can be found on the declaration form after it has been verified. Each declaration has its own reference number.
A payment is deemed to be executed if the tax amount has been received in the bank account of the Estonian Tax and Customs Board. Therefore, the time period needed for making a bank transfer should be taken into account when paying the value added tax.
Particular attention should be paid on interbank payment transfers. We advise you to acquaint yourself with money transmission conditions of your home bank.
The Estonian Tax and Customs Board is sending on monthly basis the data of submitted VAT returns and of the VAT amounts received on the basis of these returns to the tax authorities of the Member States of consumption. The Estonian Tax and Customs Board must also ensure the timely transmission of the received VAT amounts to the tax authorities of other EU Member States.
Upon failure to pay the value added tax by the due date, the tax authorities of other Member States in which the VAT is due, may address you directly and in that case you have to pay the tax amount directly to them. This way the process will take more time and it will be more expensive for the taxpayers. The tax authorities of other Member States have the right to apply the coercive measures and penalties provided by the legal acts of their countries for delaying the declaration and payment of value added tax in relation to the taxpayers registered in Estonia, because the value added tax is due in the Member State of consumption not in the Member State of registration.
- e-mail: email@example.com
- VAT consultation: (+372) 880 0812 (Mon–Thurs 8.30–16.30, Fri 8.30–15.30)
- website of the European Commission
Legal acts and guidelines regulating the taxation of services supplied under the special arrangements
- Council Directive No 2008/8/EC amending the Directive 2006/112/EC as regards the place of supply of services
- Council Implementing Regulation (EU) No 1042/2013 amending Implementing Regulation (EU) No 282/2011 as regards the place of supply of services, laying down the rules for determining the actual place of supply of services
- Council Regulation (EU) No 967/2012 amending Implementing Regulations (EU) No 282/2011 as regards the special schemes for non-established taxable persons supplying telecommunications, broadcasting or electronic services to non-taxable persons
- Commission Explanatory Notes for application of Council Implementing Regulation No 1042/2013 (PDF)
- European Commission Guidelines on establishment of a VAT Mini One Stop Shop (MOSS)