Calculating the value added tax (VAT) in Estonia

# Calculating the value added tax (VAT) in Estonia

22. March 2021, 14:14 in Accounting, Useful

In Estonia value added tax is a state tax collected by the Tax and Customs Board. Estonia regulates the value added tax by the Value Added Tax Act. The rate of the value added tax in Estonia is 20% of the value of the taxable goods or services. In some cases also 9% or 0% rate of the value added tax is implemented. The 9% rate of the value added tax applies to books, workbooks used for an educational purpose, certain medications, contraceptives, sanitary and hygiene products, medical and accessory devices for disabled people, periodically issued printed matter and accommodation.

The easiest way to calculate VAT is as follows:
1. When you have to add the VAT to the sum, you multiply the sum by 1.2 and receive the total sum including the VAT. E.g. 500 x 1.2 = 600.
For calculating the VAT multiply the sum with 0.2. E.g. 500 x 0.2 = 100 and the total sum is 500 + 100 VAT = 600.

2. When you have to deduct the VAT from the sum, you divide the sum by 1.2 and receive the sum without the VAT. E.g. 600/1.2 = 500.
To find the VAT, divide by 1.2 and the VAT is the margin between the sums or 600/1.2 = 500 and 600-500 = 100, the VAT is 100. 