An Estonian design studio finishes a digital project for a Latvian company. The work was done in Estonia and the invoice comes from Estonia, yet those facts alone do not put Estonian VAT on it. For an ordinary business service, the customer's tax status and the type of service decide the place of supply. The invoice and monthly reports must then agree. This example follows a EUR 1,500 project from delivery to the invoice, KMD and VD, showing what to check before a zero-rate entry is approved.
I am Dmitri Schmidt of AccRes. I first separate an ordinary remote service from one with a special place-of-supply rule. The example assumes lawful, unregulated design work supplied by an Estonian VAT payer to a Latvian company with a valid VAT number. Property-related work, event admission, catering and some transport services require their own analysis.
Check where this service is supplied
Under VAT Act § 10(4)(9), an ordinary service to a VAT-registered business in another member state is supplied in that customer's country. § 15(4)(1) gives a service supplied outside Estonia a 0% Estonian rate unless the service is exempt under § 16. This is the Estonian treatment; the Latvian customer accounts for the tax there under its reverse charge rules.
Verify and save the Latvian VAT number. Keep the contract and evidence that the finished files were accepted. A foreign billing address alone does not prove the buyer's status. If the customer is a consumer or the service falls within a special rule in § 10, classify the service afresh.
Build the EUR 1,500 invoice
Assume the files are delivered on 8 October 2026, with no advance. The invoice is EUR 1,500 and Estonian VAT is EUR 0. VAT Act § 37(7)–(8) requires the usual invoice details, both parties' VAT IDs, the 0% basis in § 15(4)(1), and the reverse charge notation for the customer's tax liability. Link the invoice to the contract and delivery evidence.
For this EU service, § 37(2¹) sets the invoice deadline at the 15th of the month after supply. That deadline does not move an October supply into November. If the customer pays before delivery, check the advance-payment timing in § 11 separately.
| Record | Example amount | What it shows |
|---|---|---|
| Invoice | EUR 1,500; Estonian VAT EUR 0 | Both VAT IDs, legal basis and reverse charge |
| KMD 3 and 3.1 | EUR 1,500 | Two views of the same service value |
| VD services column | EUR 1,500 | Reported by Latvian customer VAT ID |
Put the service on KMD and VD
EMTA’s service table puts this general-rule service in KMD fields 3 and 3.1. Its VD guidance puts the value in services column 5 by customer VAT number. These are reports of one EUR 1,500 sale, not separate sales. The KMD 3.1.1 goods field and the VD goods column belong to goods, not this project.
VAT Act § 28(1)(2) limits the VD duty to these services when they are taxable, but not zero-rated, in the recipient's member state. Do not put every foreign service invoice on VD by default. Confirm unusual transactions against the current forms and the customer's country treatment.
Use the October reporting period
Under VAT Act § 11(1), the service generally arises when supplied or when an earlier payment arrives. Delivery on 8 October with no advance makes October the reporting month. Sections 27 and 28 normally put October KMD and VD due on 20 November 2026.
For a long-running or regularly billed service, check § 11(4) before choosing the period. An error in an earlier VD calls for an amendment of that period; a later credit invoice follows the credit-invoice period under § 28(3).
I keep the buyer VAT check and the deliverable acceptance beside the invoice. They make the KMD and VD entries traceable to one real service rather than to a customer address.
For an ordinary EU business design project, first verify the service category and the buyer's VAT number. In this example the place of supply is Latvia, the Estonian invoice shows 0% and EUR 1,500 appears in KMD fields 3 and 3.1 plus VD's service column. A special-rule service or advance payment needs a separate place and timing check. See also: VAT declaration in Estonia.
If your company is starting regular EU service sales, send a sample invoice and short contract summary through the AccRes contact form. We can review the invoice and KMD/VD treatment before the next filing.