Estonia: Retroactive registration of VAT taxable person upheld; prior communications did not rise to level of an audit (Circuit Court decisions)

The Tallinn Circuit Court recently issued the following decisions:

• The Tax and Customs Board (MTA) was allowed to retroactively enter a car sales company registered in the Czech Republic into Estonia’s VAT register because the company generated taxable turnover in Estonia in excess of the applicable threshold of €40,000. Although the court agreed with the MTA’s assessment that the company had a permanent establishment (PE) in Estonia, the court held that a PE is not a perquisite for registration as a VAT taxable person in Estonia. The court added that the transfer of the declaration obligation to the company’s transaction partners under the reverse charge mechanism did not affect the company’s own obligation to register as a taxable person. 
• The MTA’s prior communications with a taxpayer, which involved the taxpayer providing certain information and documents to the MTA and the MTA advising the taxpayer regarding the appropriate tax treatment of a particular transaction, did not rise to the level of an audit in which the MTA was required to contest any and all of the taxpayer’s positions. Thus, the taxpayer was not relieved of its obligation to pay interest on late paid VAT due on a sale of land that the taxpayer had treated as a tax-exempt transaction and that the MTA identified in a subsequent audit.

Read a September 2026 report prepared by the KPMG member firm in Estonia