How to issue a legally valid invoice in Estonia

An invoice is more than a request for money. In Estonia it is the document that proves a sale for the seller and the customer, that carries the VAT, and that lets the customer reclaim the VAT they paid. A mistake on an invoice can cost your customer a deduction, and it can cost you a question from the tax office. This guide lists what a valid invoice shows, how to number and date it, how to correct it with a credit note, and what you do not need to add.

The purpose of an invoice

An invoice records a supply of goods or services. The seller gives it to the buyer, and a copy stays in the seller's books. The buyer keeps it as a purchase document and, if the buyer is VAT registered, uses it to reclaim the input VAT shown on it. The seller uses the same document to record the sale and the output VAT that it charged.

Because the invoice serves both sides, it must be complete when it is issued. Fixing it later is slower than getting it right the first time.

The details a valid invoice shows

The Value Added Tax Act sets out what a VAT invoice must contain. The list below is a practical checklist. Confirm the exact wording of the current act on Riigi Teataja, because the rules change.

• A sequential number. Every invoice has a number that is unique and follows the one before it. The number is covered in the next section.
• The date of issue. This is the date the invoice is made. The date of the supply is shown too when it differs from the issue date.
• The seller's details. The name and address of the company, its registry code, and its VAT number if it is VAT registered.
• The buyer's details. The name and address of the customer, and its VAT number for a sale that needs one.
• A description of the goods or services, with the quantity or the scope of the service.
• The price excluding VAT for each line, and any discount.
• The VAT rate and the VAT amount for each rate used, and the total excluding VAT, the total VAT and the total including VAT.

A payment date and the bank details help the customer pay on time. The IBAN and a clear payment reference, such as the invoice number, make it easier to match the payment later. These are not always required by the VAT rules, but they are standard practice and they reduce late payments.

Numbering invoices

Estonian invoices carry a number that follows in order. The prefix can stay the same, for example a year and a series letter, but the sequence must not skip a number or reuse one. A gap looks like a missing sale, and a duplicate looks like a forged document. Both create questions that cost time.

Choose one numbering series for the company and use it for every sales invoice. Do not start a new series for each customer or each month unless you have a clear reason. When you create an invoice in Sapita, the number is filled in for you, so you do not need to track the last number by hand.

Dates and the due date

Every invoice needs a date of issue. The due date is the day by which the customer must pay. It comes from the payment terms you agree, such as 14 or 30 days after the invoice date. A clear due date is what lets you see which invoices are late, so write it on every invoice. An invoice becomes overdue when the due date has passed and the amount is not paid in full.

Credit notes: correcting a sent invoice

A sent invoice is not edited. If the price was wrong, a quantity was wrong or the wrong customer was named, you issue a credit note. A credit note has its own number, and it refers to the invoice it changes. It cancels all or part of the earlier invoice, and it reduces the output VAT in the period it is issued.

A worked example with round numbers shows how it works. You sold 10 hours of consulting for €1,000 plus €240 VAT, and the customer should have been billed for 8 hours. You issue a credit note for 2 hours, which is €200 plus €48 VAT, and then a new invoice would be needed only if the work is to be billed again. Both documents stay in the books, and the difference is visible.

What you do not need to add

Many invoices carry text that the law does not require. You do not need a company logo, a note that the invoice was made by a software product or a long legal footer. You also do not need to print your home address if the company's registered address is shown. Adding a short payment note is fine, but do not make the invoice harder to read than it must be.

When the company is below the VAT threshold and does not charge VAT, the invoice carries no VAT line. Do not add VAT to such an invoice, because the customer could then try to reclaim it.

Electronic invoices

Many companies now send invoices as files. An electronic invoice must still show the required details, and the file must be kept in a form that can be read and checked for the period the law requires. Keep the sent file with its number, and keep the copy of the credit notes that correct it. Check the current EMTA rules before you choose a format for your customers.

A short checklist before you send

1. The number follows the last one in the series.
2. The date of issue and the due date are correct.
3. Both parties are named, with their registry codes or VAT numbers where needed.
4. Each line has a description, a quantity and a price excluding VAT.
5. The VAT rate and amount are right for each line.
6. The totals add up.

Sapita runs these checks when you create an invoice, but the final responsibility for the document stays with the company. This guide is education, not tax advice. For a complex sale, such as a cross-border service or a sale that uses the reverse charge, confirm the rule with EMTA or an adviser before you issue the invoice.

Key terms in this guide

• Invoice: the document that records a supply.
• Invoice number: the sequence that identifies each invoice.
• Credit note: the document that cancels an earlier invoice.
• Due date: the day the customer must pay.
• Overdue: an invoice past its due date and not fully paid.
• Payment reference: the text that links a payment to an invoice.
• IBAN: the bank account number the customer pays to.
• Partial payment: a payment for part of an invoice.
• Allocation: the link between a payment and the invoices it pays.
• Receivable: money a customer still owes you.
• Foreign currency: an invoice written in another currency.
• ECB reference rate: the daily rate used to convert foreign amounts.
• VAT number: the number of a VAT-registered business.
• Registry code: the company number in the Commercial Register.

Sources

• Value Added Tax Act (käibemaksuseadus), invoice requirements, Riigi Teataja: riigiteataja.ee
• EMTA, value added tax and invoices: emta.ee