Taxation of NFT in Estonia: VAT

Here is a quick general overview of how NFT is taxed in Estonia. This overview covers sales and purchases of NFT as a business and not as a private person.

Income tax

Proft from the sales of NFT is not taxed any different as profit from any other activity; the same scenario applies. There is no income tax payable when the company keeps the funds and does not distribute dividends to the shareholders.

VAT, Value added tax

But, if you are planning to buy and sell NFT, you need to be aware of how and when you need to charge VAT for the sale of NFT.

The general rule is that the sale of NFTs is a service provided electronically and, as such, taxable. This means that if you are selling NFT as part of your business, you need to charge VAT on the sale. The VAT rate that you charge will depend on who the recipient is.

If the recipient is a business, you will need to charge either 0% VAT or 20% VAT, depending on where they are located and whether they are also VAT registered.

If the recipient is a consumer in the EU VAT zone, then you need to charge the Estonian 20% VAT or the local VAT rate, which is collected through Estonia.

To put it more simply. VAT is charged, if you are selling in the EU; if selling outside the EU VAT zone, the general VAT rate is 0%.

When do I need to register as a VAT payer when selling NFT?

If your total revenue, including NFT sales exceeds the Estonian annual threshold of €40,000, you must register for VAT.

What if I’m selling in the EU to consumers?

In this case, you will need to be aware of an even lower threshold of 10 000 € per year. As with this, to avoid registering for VAT in every EU country where the end consumers are located and pay taxes to each country separately, the company can register for VAT (M)OSS and file the sales each this quarterly. registration is required, and your company will collect and pay the local VAT rate to each country.

I’m selling NFT outside the EU VAT zone; what should I know?

If you are selling NFT to a private person or a business that is not located in the EU or in the EU VAT zone, then the VAT rate is 0%.

What if I’m buying NFT?

When a business purchase NFT, the procedure is no different from any other good or service. The NFT can be considered an intangible asset or stock of the company.

To summaries

-NFTs are taxable as a service provided electronically

-The VAT rate for an electronic service depends on who the recipient is

-If the recipient is a consumer in the EU VAT zone, then you need to charge the Estonian 20% VAT or the local VAT rate

-When a business purchase NFT, the procedure is no different than with any other good or service

-The NFT is considered an intangible asset of the company.

If you have any questions about how NFT is taxed in Estonia or need help with your taxes, feel free to reach out to Comistar Estonia. We would be happy to help!