Changes in Estonia's VAT Rate and Transitional Provisions: Starting January 1, 2024, the standard VAT rate increases to 22% from the previous 20%. The VAT Act includes two transitional provisions:
- Cash Accounting Option: Until December 31, 2025, businesses using cash accounting can continue to pay VAT at the 20% rate for goods or services supplied after December 31, 2023, if the invoice was issued and goods were dispatched or services provided before January 1, 2024;
- Long-Term Contracts: Similarly, until December 31, 2025, taxable persons can apply the 20% VAT rate based on written contracts concluded before May 1, 2023, for transactions related to long-term contracts, such as those involving immovables. These contracts must specify the inclusion or addition of VAT at the 20% rate without provision for price adjustments due to VAT rate changes.
