Access to single market
One of the greatest benefits of Estonia being a member of the European Union is access to the single market. As it contains over 500 million consumers, access to it offers invaluable opportunities for trade and investments. This lets companies benefit from economies of scale and also allows small- and medium-sized businesses to successfully enter the markets of the Member States. Other valuable features of the single market are the high quality infrastructure and an educated workforce. The free movement rules also mean that employers can easily recruit from a very large pool of workers.
A significant advantage of the single market for all businesses is the creation of a level playing field – the same standards and legislation apply to everyone. The single market rules replace the often complex different sets of national legislation with a single framework, which significantly reduces the bureaucratic hurdles and costs companies would face otherwise. The unification and harmonisation of laws also means that companies can establish themselves in other Member States under the same conditions or operate cross-border from their home base.
Customs duties and tariffs
As the EU is also a customs union, one of the most important benefits of the single market is that there are no customs duties or tariffs at EU internal borders and there is a common policy towards third countries. This reduces both costs and time spent on dealing with bureaucracy for businesses wishing to operate in the EU. One of the two principal treaties of the EU, the Treaty on the Functioning of the European Union states that once a good is imported into the EU from a third country and the appropriate customs duties have been paid, it is in free circulation on the internal market and no more duties may be imposed. The principle of mutual recognition means that a product sold legally in one EU Member State should also be allowed on other markets. In addition, internal taxation also has to be neutral to domestic and imported products.
VAT in EU
VAT applies to almost all products and services bought and sold for use or consumption in the European Community, therefore goods sold for export or services sold to customers abroad are normally not subject to VAT. Internally the EU has set certain required levels for minimum regular and reduced rates, however Member States still have the right to apply their own rates accordingly.