My employee sent me an invoice, which taxes am I responsible for?

When your employee sends you an invoice, we need to first clarify that this invoice is for a professional service. It's important to note that in the European Economic Area, certain tax agreements differentiate between professional services or digital products as separate categories.

Regarding VAT, here's what you need to know:

  1. If your business is based in Estonia, you are required to pay VAT when declaring the received invoice.
  2. If your business is located outside of Estonia (e.g., France or Greece), you can accept and account for the invoice with 0% VAT under the reverse tax mechanism for professional services.
  3. If your business is located outside the EEA (European Economic Area) region (e.g., Turkey or Japan), you can accept the invoice with 0% VAT and directly attribute it as an expense.

Furthermore, some countries have VAT segments for businesses, which may vary based on whether the service is provided domestically or internationally. We recommend consulting your accounting advisor regarding this matter.

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