Estonia - Equipment, not business, transferred; VAT on legal services 

• Transfer of a catering enterprise's equipment and facilities, not the business: The Tallinn district court found that the transfer of a catering enterprise's equipment and facilities cannot be treated as transfer of the business. While the Estonian tax authority had asserted that the business was transferred to the buyer (i.e., meaning the buyer could not deduct input value added tax (VAT)), the district court held that the mere fact that a company buys from another company some catering enterprise equipment and facilities and also intends to start a catering business in the premises suitable for such activities when the opportunity arises (i.e., a lease contract is signed with the owner of the premises) cannot serve as a basis to deduce that the enterprise itself had been transferred—even when the acquirer of the movables is interested in preserving the former name of the catering and entertainment institution. (Tallinn District Court, 3-10-3406)
• Payment of “success fee” treated as payment for services when legal advice is provided by lawyer: The Tartu district court held that a settlement of invoices on the basis of both hourly fees and “success fees” may be treated as legal service. Therefore, input VAT is to be deducted from the amount of calculated VAT, provided that the goods or services have been acquired for the purposes of taxable supply. In this case, the legal advice service purchased was directly related to the business, and thus was a service acquired for the purposes of a taxable supply. (Tartu District Court, 3-10-1768)

Read a November 2012 report [PDF 49 KB] prepared by the KPMG member firm in Estonia: Info Courier (November 2012): Court judgments

For more information, contact a professional with KPMG in Estonia:

Tõnu Kolts, Tax

+3726268700