Estonia has proposed significant tax reforms aimed at strengthening its fiscal system, optimizing VAT collection, and reducing fraud. Among the key measures are the elimination of the €1,000 threshold for declaring transactions and the mandatory implementation of e-invoicing for B2B (Business-to-Business) operations starting in 2027. 

Context 

Estonia is the Baltic country with the lowest GDP, at around 42.7 billion euros (World Bank), as it is surpassed by Latvia, but especially by Lithuania. Like the other two states in its region, it has also belonged to the European Union since 2004. Furthermore, its percentage of the unemployed population reached 7.6% according to Eurostat, with better data than Sweden, Finland, and Spain. 

Prior to this tax reform on electronic invoicing in Estonia, both corporate tax and personal income tax were increased to a withholding rate of 22%. 

Tax reform in Estonia 

The removal of the threshold will require all transactions, regardless of their amount, to be reported. Additionally, the introduction of e-invoicing for all business-to-business operations will streamline processes, reduce administrative burdens, and automate the invoicing system. 

In parallel, amendments to the Accounting Act have been approved, allowing companies to require e-invoices from their suppliers starting in July 2025. Then, the Estonian government also added an increase to the normal VAT, making it 24% from this very month. 

These reforms are part of a broader plan to digitize the country's fiscal administration. This trend has been prominent in Estonia's tax system in recent months. Other countries, such as Mexico and Costa Rica, also want to promote electronic invoicing and the automation of certain tax processes. 

If you want to outsource your tax management in Estonia or in the over 50 countries where we operate, do not hesitate to contact us. We will adapt to the needs of your expansion process with your multinational or investment fund. 

We invite you to contact us via our form for a personalized consultation. 

At Auxadi, we offer comprehensive services in accounting, tax, payroll, transfer pricing and corporate legal services to multinationals and funds. With experience since 1979 and a presence in over 50 countries, including 22 proprietary subsidiaries, our advanced technological platform and proven methodology enable us to guarantee efficient management in compliance with local regulations.