Invoicing an EU client from an Estonian OÜ: required details, VAT and reverse charge

We made the first invoices for Opentech OÜ in Google Sheets. It took us a long time to find a template we liked. After that, the real work started:

• We billed by the days we worked. So every month we counted the working days again and changed the total.
• The sheet often grew to a second page. An invoice is much easier to print and send when it fits on one page.
• We did not know how to show VAT correctly, so we asked our accountant.

A couple of times we made a real mistake. We sent an invoice to a client in another EU country without VAT. That part was right. But we did not put the client’s VAT number on it. The total was correct, because the client had a VAT number and did not have to pay Estonian VAT. Still, without that number the invoice did not meet the rules. The clients paid before we noticed, so we did not have to fix anything. We were lucky, and luck is not a process.

Below is what we wish we had known before our first invoice. The links go to the law and to the Estonian Tax and Customs Board (EMTA).

This is not tax advice. The rules change, and every company is different. If you are not sure, ask an accountant.

OÜ or FIE: e-residents need an OÜ

If you are an e-resident and you do not live in Estonia, you need an OÜ. The official e-Residency help center says that a sole trader (FIE) must be based in Estonia, so this form is usually not available to e-residents (e-resident.gov.ee).

If you live in Estonia and work as an FIE, this article is for you too. The invoice rules do not depend on your type of business. They depend on whether you are registered for VAT.

Start with VAT

Most of what goes on the invoice depends on your VAT status.

You must register for VAT when your sales with the place of supply in Estonia go over €40,000 in a calendar year. The duty starts on the day you pass that amount (VAT Act § 19).

The standard VAT rate is 24% since 1 July 2025 (EMTA).

Why a small OÜ registers for VAT early

You can also register before you reach the limit. You just send an application (VAT Act § 20). For many e-residents this is a good idea. Here is why.

If all your clients are outside Estonia, you will never reach the limit. Only sales with the place of supply in Estonia count. Services for companies in other EU countries or outside the EU do not count. So you never have to register, but you also cannot get back the VAT you pay on your costs.

A VAT registered company can deduct the VAT it pays on business costs. This also works when the business itself is done abroad (VAT Act § 29). Some examples:

• A laptop costs €1,240 with 24% VAT. €240 of that is VAT. A registered company gets it back. A company without registration loses it.
• An accountant costs €150 a month plus VAT. That is €36 of VAT a month, or €432 a year.
• The same goes for coworking, conferences and software from Estonian suppliers.

Buying services from foreign companies is not free of VAT either. Say your company is not registered and it buys hosting, design or advertising from a company abroad. Then it must register as a “taxable person with limited liability” and pay Estonian VAT on that service (VAT Act § 21). It cannot deduct this VAT. A fully registered company adds the same VAT and deducts it in the same return, so the result is zero.

There are also downsides:

• You must file a VAT return (KMD) every month by the 20th, even when you had no sales.
• Sales to EU clients also go into the VD report.
• When you apply, the tax office will ask you to show that you do business in Estonia or are about to start (VAT Act § 20(4¹)).

What an invoice must contain

If you are registered for VAT, the VAT Act gives the list (§ 37(7)):

1. The invoice number and the date of issue.
2. Your name, address and VAT number (KMKR).
3. The name and address of the buyer.
4. The buyer’s VAT number, when the buyer pays the tax. This is reverse charge, which we explain below.
5. What you sell: the name or a description of the goods or services.
6. How many goods, or how much service.
7. The date of the supply, if you know it and it is not the invoice date.
8. The price without VAT, and any discounts that are not in the price.
9. The amount for each VAT rate and the rates, or the amount of sales that are free of VAT.
10. The VAT to pay. You always show the VAT amount in euros.

If you are not registered for VAT, the rules are lighter. They come from the Accounting Act (§ 7). The invoice must say when the deal happened, what it was, and the numbers: quantity, price and total. If your client is a company, also add the invoice number and details that identify both sides. The law gives a simple test: an independent expert must be able to understand what happened.

A client in Estonia and a client in the EU get different invoices

A client in Estonia

This is a normal invoice with 24% Estonian VAT.

A company in another EU country

For services between companies, the general rule is simple. The place of supply is the country where the buyer is registered (VAT Act § 10). If your client is registered for VAT in Germany, Finland or Poland, you do not add Estonian VAT. The client pays the tax in their own country. This is called reverse charge.

The invoice needs three things:

• The client’s VAT number. It is required (§ 37(7)(4)). This is the part we forgot. Check the number in the EU VIES database before you send the invoice.
• The note “reverse charge”, or other clear words that mean the same (§ 37(8), (8¹)).
• 0% VAT. The VAT line is empty, and the total is the same as the amount without tax.

There are also two deadlines that people often miss:

• You must send the invoice for this kind of service by the 15th of the next month (§ 37(2¹)). For normal sales the deadline is 7 days.
• These sales go into the VD report on sales to other EU countries. You file it by the 20th of the next month, together with your VAT return (§ 27, EMTA).

If the client is a private person and not a company, reverse charge does not apply.

The invoice number

The number must follow a sequence (§ 37(7)(1)). The easiest way is one series for all invoices: 2026/001, 2026/002 and so on.

Credit notes: when the amount goes down or the invoice is cancelled

A credit note (kreeditarve) lowers the amount of an invoice you already sent, or cancels it. You need one when something changes after you send the invoice. For example:

• The client returned goods or did not need part of the service.
• You agreed on a discount later, for example because a deadline slipped.
• You sent the same invoice twice, or billed too many days.
• The project was cancelled after you had billed an advance.

A credit note must refer to the original invoice. Then the law treats it as an invoice too (§ 37(4)). The amounts on it are negative. It lowers your sales and, if the first invoice had VAT, the VAT as well. Your client also gets a document that their accountant can use to lower their costs.

Currency

You can send an invoice in dollars, pounds or any other currency. But if the invoice has VAT, you must also show the VAT amount in euros. Use the European Central Bank rate for the date of the supply (§ 37(7)(10), § 29). With reverse charge there is no VAT on the invoice, so you have nothing to convert.

E-invoices

Since 2019, invoices to public sector bodies must be e-invoices (e-arve). Since 1 July 2025, any company that is registered to receive e-invoices can ask its suppliers to send e-invoices (Ministry of Finance). If your client has not asked for one, a normal PDF is enough.

Checklist before you send

• The number is the next one in the series, and the date is right.
• Your details: name, address, registry code, VAT number (if you have one), bank account.
• Client details: name, address, VAT number (for an EU client, checked in VIES).
• A company client in the EU? Then 0% VAT and the note “reverse charge”.
• A client in Estonia? Then 24% VAT.
• A description of the service, the quantity or period, and the price.
• An invoice in another currency with VAT? Also show the VAT in euros.
• Deadline: 7 days after the supply. For an EU client, by the 15th of the next month.

How we solved it for ourselves

At some point the spreadsheet, the accountant and our memory were not enough. So we built Invoices, a small tool for exactly this job:

• You enter your company details once, and they appear on every invoice.
• The client card keeps the VAT number and a reverse charge flag. New lines then suggest 0% VAT, and the invoice shows the note.
• Each invoice gets the next number in the series when you issue it.
• You can print the invoice in English, Estonian or Russian, as a PDF or as a public link.

You can create up to 5 documents a month for free.