The Council of the European Union has approved Estonia's plan to increase to €40,000 the annual turnover threshold beyond which businesses are obligated to register as value added tax (VAT) payers.
"By raising the VAT registration threshold, we'll reduce bureaucracy and make the tax environment more favorable for small enterprises," Minister of Finance Sven Sester said on social media. "Life will become simpler for all small businesses whose annual turnover does not exceed €40,000."
The proposed amendment concerns 15 percent of VAT payers who will be able to choose whether to pay VAT in the future. Close to 4 percent of VAT payers are expected to delete themselves from the register.
The current VAT registration threshold of €16,000 has been in effect since April 1, 1995.
The amended law will enter into force on Jan. 1, 2018.
Editor: Aili Vahtla