The Estonian Ministry of Finance has proposed significant changes to VAT reporting and the implementation of mandatory e-invoicing to improve VAT collection.
Changes to VAT reporting
A key aspect of the reform is the removal of the €1,000 threshold for declaring transactions, requiring VAT payers to report all transactions. This change aims to close loopholes, as many small transactions under the threshold are often undeclared, contributing to tax evasion. In 2023, approximately €327 million in input VAT went unreported.
A 2014 reform, which required more detailed invoice declarations, resulted in an increase of over €100 million in VAT receipts. Building on this success, the Ministry believes that the introduction of e-invoices will further enhance VAT receipts by reducing administrative burdens, improving data quality, and preventing fraud. Already, 47% of entrepreneurs are prepared to adopt e-invoicing, which will also be mandatory for cross-border transactions within the EU from July 1st, 2030.
The proposed changes are expected to increase VAT receipts by €16.6 million annually and could take effect by 2027. These measures align with broader EU trends, as several countries are also moving towards mandatory e-invoicing.
Sources:
– https://www.fin.ee/uudised/rahandusministeerium-esitas-ettepanekud-kaibemaksulaekumise-parandamiseks
