There are two main changes:
  • As according to the European Union VAT directive all land designated for construction should be VAT taxable, the Estonian Value-Added Tax Act will be harmonised with the EU VAT directive and the concept of ‘plot’ will be replaced with ‘building land’. Building land is a wider concept than plot which will significantly expand the VAT tax base.
  • Current transitional provision, stating that the 20% tax rate shall not be applied on transfer of buildings prior to their first entry into service if the construction works began before the 1st of May 2004, will become void and all land intended for construction shall be taxed by 20% VAT regardless of the time of its purchase.

For more detailed information on the subject, please see the full article on our Estonian website: https://leinonen.ee/news/news-2018/on-1st-of-october-2018-the-taxation-of-immovables-under-the-value-added-tax-act-will-change