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VAT Reporting in Estonia: The Guide to KMD

Complete guide to the Estonian KMD (käibemaksudeklaratsioon): how the monthly VAT return works, every row explained, input VAT reclaim, reverse charge self-assessment, nil returns, VAT refunds, and common errors that create EMTA back-assessments.

KMD Due 20th Output VAT Input VAT Reclaim Reverse Charge VIES Verification Nil Returns Refunds
20th KMD Deadline
24% Standard VAT Rate
0.06% Daily Interest
Nil Returns Required
VIES Verify EU Clients

What the KMD Is and Why It Matters

Monthly VAT return: mandatory for every VAT-registered OÜ
The KMD (käibemaksudeklaratsioon) is Estonia’s monthly VAT return. Every OÜ registered as a käibemaksukohustuslane (VAT taxpayer) must file the KMD by the 20th of each month for the prior month – without exception. Nil returns are mandatory even when there are zero transactions.
Due by the 20th, no grace period
The KMD deadline is the 20th of the month following the reporting period. A KMD for January is due by 20 February. Late filing may result in enforcement measures or penalties, while interest accrues on unpaid VAT at the applicable statutory rate from the day following the payment deadline. There is no reminder system – the deadline is your responsibility.
KMD reconciles output VAT against input VAT
The KMD declares output VAT at the applicable Estonian VAT rates and deductible input VAT on eligible purchases. The net position – output minus input – is either paid to EMTA (if positive) or refunded from EMTA (if negative). This is the fundamental VAT accounting equation.
Reverse charge: EU B2B purchases require self-assessment
When an Estonian VAT-registered business receives services subject to reverse charge, the taxable value is reported in the applicable KMD fields, VAT payable is included in Row 4, and deductible input VAT is included in Row 5 where the right of deduction exists. The net cash effect is zero, but it must be declared. Omitting it is an EMTA compliance error.
VIES verification is required before applying 0% to EU B2B sales
For qualifying intra-Community supplies and cross-border B2B services, verify the customer’s VAT status and retain appropriate evidence. An invalid VAT number does not automatically mean that 24% Estonian VAT applies to every type of transaction. We verify all EU client VAT numbers before every zero-rated invoice.
Input VAT refunds are possible – and regularly occur
If your input VAT exceeds your output VAT in a month – common for businesses with large purchases, import-heavy months, or new capital expenditure – the KMD shows a negative balance. VAT overpayments are refunded under the applicable Taxation Act procedures; processing time may vary, particularly where EMTA requests supporting documents or conducts verification.

The KMD is not just a payment mechanism – it is a reporting declaration. Even if you owe zero VAT, you must still file. Even if you have never issued a single invoice this month, you must still file. The obligation is to declare your VAT position, not merely to pay. Late filing fines apply regardless of whether any VAT is owed.

KMD Structure: Every Row Explained

What goes in each row of the Estonian VAT return and why

The KMD Row by Row

The KMD contains multiple numbered fields covering taxable supplies, VAT payable, deductible input VAT, intra-Community transactions, imports, exempt supplies and other reportable transactions. Each row corresponds to a category of supply or input. Understanding which row your transactions belong in is the core of correct VAT reporting. The VAT code column shows the Merit Aktiva/accounting software code used to classify each transaction.

KMD Row Name (Estonian) Type VAT Code What Goes Here
Row 1 Maksustatav käive 24% Output VAT KM24 Acts and transactions subject to VAT at 24%; output VAT = Row 1 × 24%
Row 2² Maksustatav käive 13% Output VAT KM13 Acts and transactions subject to VAT at 13%: accommodation or accommodation with breakfast. Qualifying books and press publications are generally taxed at 9% and reported in Row 2.
Row 3 0% määraga maksustatavad toimingud ja tehingud Taxable value – zero-rated KM0 EU Total acts and transactions subject to VAT at 0%; qualifying intra-Community supplies and certain cross-border services are additionally reported in Row 3.1.
Row 3.2 Eksport Output – zero-rated KM0 EX Exportation of goods included in the total 0% supplies reported in Row 3.
Row 8 Maksuvaba käive Exempt – no VAT Exempt Supply exempt from VAT (financial services, insurance, residential rental) – appears here but no VAT charged or reclaimable
Row 5 Sisendkäibemaks Input VAT – reclaimable V24 Total deductible input VAT under the VAT Act, including eligible domestic, intra-Community, reverse-charge and import VAT.
Row 6 Kauba ühendusesisene soetamine ja teise liikmesriigi maksukohustuslaselt saadud teenused kokku Taxable value of acquisitions and services – not a VAT amount V RC Taxable value of intra-Community acquisitions of goods and services received from taxable persons of other Member States; the related VAT payable is included in Row 4 and deductible input VAT in Row 5 where applicable.
Row 4¹ / Row 5.1 Import Input VAT – import VAT Import Import VAT payable through the VAT return is reported in Row 4¹; deductible import VAT is included in Row 5 and specified in Row 5.1 where applicable.
Row 12 / Row 13 Tasumisele kuuluv KM Payment / Refund – VAT payable is calculated using the current KMD fields for VAT due and deductible input VAT; the final VAT payable is reported in Row 12 and any overpayment in Row 13.
Reverse Charge Reporting in KMD – In Detail
Row 6 reports the taxable value of specified intra-Community acquisitions and services received from taxable persons of other Member States. The corresponding VAT payable is reported in Row 4 and deductible input VAT in Row 5, subject to the right of deduction.
Reverse Charge – Row 6 Self-Assessment Example
October: Estonian OÜ receives invoice from AWS Ireland for cloud hosting
AWS invoice amount: €1,000 net (no VAT shown – AWS applies reverse charge)
AWS is an EU VAT-registered company; supply is a B2B service
KMD entries required for October:
Report the €1,000 taxable value in the applicable acquisition/service field and include €240 of self-assessed VAT in Row 4 (adds to output)
Where fully deductible, include the €240 as deductible input VAT in Row 5 (reduces VAT payable)
Net VAT effect on KMD: €240 output − €240 input = €0 net
Cash impact: ZERO – but both entries must appear on the KMD
If you OMIT Row 6 (common mistake):
Output VAT understated by €240
Input VAT understated by €240
Net VAT is still zero – but EMTA sees an underdeclared EU acquisition
EMTA can assess for the omitted Row 6 output VAT (€240) even though the input VAT offsets it, because the declaration was incomplete
* Declare services received from EU taxable persons in the applicable KMD fields, including Row 6 for the taxable value, Row 4 for VAT payable and Row 5 for deductible input VAT where applicable – even when the net effect is zero
* Common suppliers triggering Row 6: AWS, Google, Microsoft, Stripe, Slack, Zoom, Adobe

Input VAT Reclaim

What you can reclaim – and the restrictions that apply

Input VAT Eligibility Reference

Input VAT (sisendkäibemaks) is the VAT paid on your OÜ’s business purchases. Under the Käibemaksuseadus §30, input VAT is reclaimable when: the purchase is used for your taxable business activities, you hold a valid VAT invoice addressed to your OÜ, and the supplier is VAT-registered in Estonia or the EU. Several restrictions apply – particularly for cars, entertainment, and personal use items.

Purchase Type Input VAT? VAT Code Notes / Conditions
Invoice from Estonian VAT-registered supplier ✓ Subject to deduction rules V24 A valid invoice and VAT registration alone do not establish full deductibility. Deduct only eligible VAT attributable to taxable business activities, subject to statutory restrictions.
SaaS/software subscription from EU company (B2B) ✓ To the extent deductible V RC For standard-rated reverse-charge services from an EU taxable person, report the taxable value in Rows 1 and 6, VAT payable in Row 4 and deductible input VAT in Row 5. Net VAT is zero only with full deduction.
Cloud hosting from non-EU provider (B2B service import) ✓ To the extent deductible V RC For standard-rated reverse-charge services from a non-EU business, report the taxable value in Rows 1 and 7, VAT payable in Row 4 and deductible input VAT in Row 5. Net VAT is zero only with full deduction.
Business travel – flights (Estonian carrier, Estonian destination) ✓ Where VAT charged V24 Many transport services are zero-rated; reclaim only where supplier shows VAT on invoice
Business meals and entertainment Subject to statutory rules V24 Input VAT is generally not deductible where the expenses relate to receiving guests or providing meals or accommodation to employees, subject to specific statutory exceptions.
Fuel for company car (100% business use, logged) ✓ Full V24 Fuel card receipt or tax invoice required; 100% reclaimable if car is 100% business use with mileage log
Fuel for company car (mixed personal/business use) Statutory limitation applies V24 For a passenger car used partly for business purposes, the special passenger-car input VAT limitation generally applies; deductible VAT is not determined simply by the mileage-based business-use percentage.
Personal expenses paid through OÜ by mistake ✗ None – No input VAT deduction. Record and recover the amount from the individual. If the company bears the expense, apply the relevant tax treatment: employee or board-member benefits generally constitute fringe benefits, rather than an automatic profit distribution.
Passenger car purchase Up to 50% V24 Input VAT on a passenger car and related expenses is generally deductible up to 50%, subject to statutory exceptions that may allow full deduction where the vehicle is used exclusively for qualifying business purposes.
Computer/laptop for business use ✓ Full V24 100% business use: full input VAT; mixed use: document business proportion and reclaim accordingly
Office rent from non-VAT-registered landlord ✗ None – Residential landlord not VAT-registered; no VAT on invoice; nothing to reclaim
Accounting fees from Company for Business ✓ To the extent deductible V24 Our invoices include 24% VAT. Deduction depends on use for activities carrying a right to deduct; costs attributable to exempt activities generally do not qualify.

Partial Input VAT: Mixed Business and Personal Use

When an asset or service is used for both business and personal purposes, only the business proportion of input VAT is reclaimable. The most common examples are company cars used for personal journeys and home internet used partly for work. The business proportion must be documented – a mileage log for vehicles, a usage agreement for home expenses.

Mixed-Use Asset Documentation Required Business Proportion Reclaimable How to Determine the Proportion
Company car: fuel and running costs Apply the statutory passenger-car input VAT deduction rules; mixed-use passenger cars are generally subject to a 50% deduction limitation rather than a simple mileage-based percentage. Generally 50% under the statutory limitation Apply the passenger-car limitation; document the basis where a full-deduction exception is claimed
Company car: purchase price Input VAT is generally deductible up to 50% for mixed-use passenger cars; full deduction may be available where the statutory exclusive-business-use or other qualifying exceptions are met. Generally 50% Exception: car dealer, rental company, taxi; most OÜs cannot reclaim full car purchase VAT
Home internet used for business Invoice issued to the OÜ; evidence of business use Eligible VAT attributable to taxable business use Reimbursing an internet invoice issued to an employee or owner does not entitle the OÜ to deduct its VAT. A usage agreement alone is insufficient.
Office portion of rent Written usage agreement; floor area calculation Business floor area ÷ total floor area × rental VAT (if applicable) Residential rent usually exempt – landlord not VAT-registered; often no input VAT to reclaim
Mobile phone Deduct input VAT to the extent the service is used for taxable business activities; private use must be treated separately under the applicable VAT and fringe benefit rules. Business proportion If significant personal use, split and declare private portion as fringe benefit (erisoodustus)

How We Prepare Your Monthly KMD

The process from document collection to EMTA submission

Monthly KMD Preparation Process

1. Collect all documents
Bank statements, sales invoices, purchase invoices, and expense receipts are all in Merit Aktiva by the 7th. EU supplier invoices tagged for reverse charge review.
2. Post with correct VAT codes
Every transaction assigned the correct VAT code: KM24 for standard sales, V24 for input, V RC for reverse charge. EU client invoices checked via VIES before posting at 0%.
3. VIES verification for EU B2B
For EU B2B transactions, verify the customer’s VAT status and apply the correct VAT treatment according to whether goods or services are supplied and the applicable place-of-supply rules; 24% Estonian VAT should not be applied automatically solely because a VAT number is invalid.
4. KMD prepared in Merit Aktiva
Merit Aktiva generates the KMD directly from the posted transactions. All rows auto-populated. We review the totals against the underlying ledger before finalising.
5. Filed via EMTA e-Tax portal
KMD submitted electronically by the 20th. Submission reference number retained. VAT payable transferred to EMTA’s account by the same deadline.

VIES Verification: What It Is and How to Do It

VIES (VAT Information Exchange System) is the EU’s online database of VAT-registered businesses in all EU member states. For transactions where the customer’s EU VAT status is relevant, verify the VAT number through VIES and retain supporting evidence of the customer’s business status. The check is free and instant at vies.ec.europa.eu.

VIES Check Result Meaning Action on Invoice KMD Treatment
Valid – company name and address match The buyer is a VAT-registered business in their country Apply the appropriate cross-border VAT treatment; qualifying services and intra-Community supplies are reported in Row 3 and, where applicable, Row 3.1, with VD reporting where required. Row 3 and, where applicable, Row 3.1; VD reporting where required
Valid: name not shown (some countries) The VAT number is active even without name confirmation Acceptable – apply the cross-border treatment if you have other evidence the buyer is a business (contract, correspondence) Row 3 and, where applicable, Row 3.1
Invalid – number does not exist The number entered is wrong, or the company is not VAT-registered Reassess the customer’s status and the applicable place-of-supply rules before determining whether Estonian VAT must be charged. Row 1 only where Estonian VAT is actually due after reassessment
If VIES is temporarily unavailable, retain evidence of the attempted verification and obtain alternative evidence of the customer’s business status where permitted before finalising the VAT treatment.

Common KMD Errors

The mistakes that create EMTA back-assessments and how to avoid them

Errors That Trigger EMTA Interest and Back-assessments

The KMD errors below are the most frequent causes of EMTA contact with Estonian OÜs. Each error has a specific EMTA consequence and a correction method. The consequence column is highlighted in red because each of these errors carries real financial cost – interest at 0.06%/day plus potential fines.

Common Error Row Affected EMTA Consequence Correction Method
EU reverse-charge purchase omitted The applicable taxable-value field, VAT payable in Row 4 and deductible input VAT in Row 5 may all require correction. EMTA sees import of services not declared; potential VAT assessment + interest Amend the relevant taxable-value fields, VAT in Row 4 and deductible VAT in Row 5. For standard-rated EU services, include the taxable value in Rows 1 and 6; for intra-Community goods acquisitions also complete Row 6.1. The net effect is zero only if the VAT is fully deductible.
Qualifying EU B2B transaction incorrectly reported as domestic 24% supply Row 1 overstated; Row 3 understated VAT overcollected from client (24% charged when it should be 0%); EMTA sees discrepancy Correct the relevant KMD fields, including Row 3/3.1 and VD where applicable; issue a credit note to the client and reissue the invoice at 0%
Input VAT claimed on purchase invoice not addressed to the OÜ Row 5 overstated EMTA can disallow the input VAT; require repayment + interest Only claim input VAT on invoices addressed to your OÜ’s name and registration code; ask supplier to reissue if addressed incorrectly
Incorrect input VAT deduction on passenger-car expenses Row 5 overstated EMTA back-assesses the excess deduction + interest Apply the statutory passenger-car deduction limitation; maintain the documentation required for any full-deduction exception; amend prior KMDs where overclaimed
Nil KMD not filed Nil return not submitted Submit the missing return promptly; enforcement measures or penalties may apply even where no VAT is payable. File nil KMD immediately; pay late filing fine if assessed; set up monthly calendar reminder
Input VAT claimed on expenses for receiving guests or employee meals without checking the applicable deduction restriction Row 5 overstated EMTA back-assesses the ineligible input VAT claimed + interest; §30(4) restriction applies Correct the return according to the statutory input VAT deduction rules; code meal expenses correctly
KMD filed but VAT payment not made by the statutory deadline Payment only 0.06% daily interest on unpaid VAT from the day after the payment deadline. If the 20th is a weekend or public holiday, the deadline moves to the next working day. Pay immediately to stop interest; EMTA portal shows exact balance including accrued interest

VAT Refunds: When You Are Owed Money Back

If your input VAT for the month exceeds your output VAT, the KMD shows a negative balance – EMTA owes you a refund (enammakstud käibemaks). This is common for businesses with significant EU B2B purchases, large capital expenditures, or businesses that export most of their output (zero-rated exports mean output VAT is zero, but input VAT is reclaimable in full).

Refund Scenario Why Input Exceeds Output Refund Processing Time EMTA Action
Month with large equipment purchase Equipment VAT (24% of purchase price) creates large input; small regular sales create small output Refund timing depends on the applicable Taxation Act procedure and whether EMTA conducts additional verification. EMTA may verify the purchase before paying large refunds – have invoice ready
Export-heavy month (goods exported outside EU) Exports are zero-rated output (Row 3.2) so no output VAT; all input VAT on purchases is still reclaimable Processing time may be extended where EMTA requests supporting documents or conducts additional verification. Export documentation (CMR, customs declaration) required if queried
Company with qualifying EU cross-border B2B clients reported in Row 3/3.1 and, where applicable, VD Qualifying zero-rated sales generate no output VAT. Only purchases carrying deductible VAT generate an input VAT credit; reverse-charge purchases normally produce matching output and input VAT when fully deductible. Generally within 60 days of the refund request; if requested before the tax payment deadline, from that deadline. Statutory extensions may apply. Consistent negative KMDs may trigger EMTA review; maintain complete VIES records
First months after VAT registration (start-up) High start-up costs with VAT; minimal initial sales Generally within 60 days of the refund request; if requested before the tax payment deadline, from that deadline. Statutory extensions may apply. EMTA expects refund claims from new registrants, which is not unusual; document all start-up purchases

Frequently Asked Questions

Yes – a nil KMD return must be filed even when there are zero transactions. The obligation to file arises from your VAT registration status, not from whether any taxable activity occurred. A nil KMD has all rows at zero and the net VAT payable is zero – but it still must be submitted by the 20th of the following month. Filing a nil KMD takes approximately 2 minutes in the EMTA e-Tax portal. Failure to file a required nil KMD may result in enforcement measures or penalties. We file nil returns automatically for all VAT-registered clients on our monthly accounting package – you do not need to track or request this.

EMTA routinely requests supporting documentation for input VAT claims that result in refunds, particularly large refunds or consistent monthly refund positions. What you typically need to provide: the original purchase invoices for all significant input VAT claimed in the period (especially invoices over €500 input VAT), confirmation that each invoice is addressed to your OÜ’s name and registration code, confirmation that the purchases are used for your taxable business activities, and for reverse-charge transactions, the supplier invoices and documentation supporting the taxable value, VAT payable and any corresponding input VAT deduction. We prepare the EMTA response documentation as part of our VAT management service – we compile the invoices, prepare a reconciliation showing how the input VAT figure in Row 5 and Row 6 is supported, and submit the response within the EMTA deadline.

This mixed supply situation is common and each type of sale is handled differently. Estonian B2B clients (VAT-registered): 24% VAT on invoice; Row 1 on KMD. Estonian B2C consumers: 24% VAT on invoice; Row 1 on KMD. EU B2B clients – apply the appropriate place-of-supply or intra-Community supply rules; qualifying transactions are generally reported in Row 3/3.1 and, where required, in VD; verify VIES. For qualifying intra-EU distance sales of goods and TBE services below the €10,000 EU-wide threshold, Estonian VAT may apply if all statutory conditions are met. EU B2C consumers (above €10K/year EU-wide total): Destination-country rate via OSS; declared on OSS quarterly return, NOT on the monthly KMD. Transactions with non-EU customers must be assessed separately under the applicable place-of-supply and export rules; they are not automatically outside the scope of VAT or KMD reporting. Correct tracking of each client type and their purchase volume is essential – mixing them up creates KMD errors and potential overclaimed refunds or underpaid VAT.

File a corrected KMD for the affected period as soon as possible. EMTA allows amended KMD declarations for prior periods. In the EMTA e-Tax portal, navigate to the prior period’s KMD and select ‘Correct the declaration’. Enter the correct figures – EMTA calculates the difference. If the correction results in additional VAT owed (because you overclaimed input VAT), you pay the additional VAT plus 0.06%/day interest from the 21st of the original filing month. Pay both the corrected VAT amount and the interest to EMTA immediately after filing the corrected KMD. Voluntary correction should be made promptly, but the consequences depend on the circumstances; do not guarantee that only interest and no other penalties can apply. We handle prior period KMD corrections as part of our VAT management service.

Invoices from AWS, Google Workspace and Slack should be reviewed individually based on the contracting entity and supplier VAT details shown on the invoice before applying the reverse-charge treatment. Where the supplier is a taxable person of another Member State, the invoice to your Estonian OÜ is issued without VAT and reverse charge applies. Your obligation: report the taxable value in the applicable KMD acquisition/service field, include the self-assessed VAT in Row 4 and claim the corresponding deductible input VAT in Row 5 where the right of deduction exists. The net cash effect is zero – but the declaration is mandatory. If you use Merit Aktiva and tag these invoices with the V RC (reverse charge) VAT code when posting them, Merit Aktiva automatically populates Row 6 correctly when generating the KMD. Missing these is one of the most common KMD errors we see in new clients’ prior bookkeeping.

Need your Estonian KMD filed correctly every month?

Book a free consultation. We prepare and file your KMD by the 20th every month – output VAT reconciled, input VAT maximised, reverse charge correctly handled, and VIES verified.

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