You are in the right place if you would like to get more info on accounting in Estonia or if you require assistance with annual report submission!
All companies in Estonia are obliged to file a report for the previous reporting period. The report must comply with legal requirements and must be submitted in a specific form. The report includes an accounting report and an activity report.
The reporting period lasts a year, and as a rule, for most companies in Estonia it corresponds to a calendar year. It is important to mention that when registering a company in Estonia or when changing the Articles of Associations, this period can be set at your discretion, provided that it starts and ends on the first and the thirty-first date of the corresponding month.
When registering a company in Estonia, the reporting period can last one and a half years. For example, if a company in Estonia was registered in July 2020, then the report for 2020 can be submitted together with the report for 2021, therefore, in 2022.
Accounting in Estonia and Report Requirements
The report must be prepared in the official state language, that is, Estonian, in Euro currency.
The annual report of an Estonian company includes:
- Income statement and balance sheet
- Cash flow statement
- Statement of changes in equity of the company
- Appendices with clarifications
Accounting in Estonia – Audit and filing the report
It is necessary to submit a report to the commercial register in electronic form no later than 6 months from the end of the reporting period.
Therefore, an Estonian company whose reporting period corresponds to a calendar period must submit a report for 2020, by June 30, 2021.
Accounting in Estonia – Penalties and sanctions
If a company is late in filing a report, does not submit it at all, or submits it with errors, fines and sanctions may follow, both in relation to the company and to the member of the board. The amount of the fine starts from 200 Euros and, depending on the circumstances, can be substantial sums.
Also, in our practice, there have been cases when members of the board of an Estonian company (citizens of non-EU countries) with a fine were prohibited from entering the territory of Estonia and the European Union.
In our practice, there have also been cases when a board member was not aware of the obligation to submit reports and, accordingly, did not submit them for several years. The e-mail that was indicated by the company was invalid, the registration address did not correspond to the place of residence, therefore, the board member simply did not receive a notification.
The company was charged a fine and after a while, the company was removed from the register forcibly. The main problem was that the company had current accounts in foreign banks, contractual obligations with customers and suppliers.
There were hundreds of thousands of euros on the company’s current accounts, but the company could not use/return these funds, since the legal entity no longer existed, and the client could not provide the necessary documents to the bank.
In this case, we managed to assist and restore the legal entity in court, however, this process is time consuming and difficult.
When is the best time to prepare and submit a report?
If the company has an accountant, or the company in Estonia is accompanied by a corporate service provider, then, as a rule, accounting records are kept on a regular, monthly basis, which allows you to prepare and submit an annual report without any problems.
However, if you prepare financial statements once a year, then we advise you to start preparing them immediately after the end of the reporting period.
The fact is that it is quite difficult for accountants to understand and summarize all reporting for the year, but more often than not, the company does not have any documents, contracts, invoices for the previous year, which must be found or requested from the counterparty.
Also, it is worth mentioning that the “hot period” begins for accountants from March to July, and it can be quite difficult to find an accountant who would have had the time to prepare your report on time.
Advises and recommendations for Estonian companies
We advise you to start keeping accounting records from the moment the company was founded.
This way you can not only control the financial situation in the company, but also be confident in the legality of your actions. A qualified accountant or corporate service provider will have time to notice errors and shortcomings, which they will pay attention to and it will allow you to stay within the legal framework.
We also advise you to pay attention to what software your potential accountant works with. For the owners of Estonian companies from foreign countries, as a rule, it is convenient to keep records for instance in Quickbooks, such an opportunity also exists in Estonia.
If you conducted activities and did not submit reports, then we advise you to tackle this issue right now. The further, the more difficult it will be to understand the documents and prepare reports for previous periods.
Accounting in Estonia – Document storage period
Accounting related documents must be kept for at least 7 years. The accountant is responsible for keeping records of the reporting period. Please note that a member of the company’s board is responsible for the reporting of previous reporting periods.
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Private Financial Services will help you!
If you need to prepare reports, keep accounting in Estonia or submit an annual report, then the specialists of Private Financial Services will be happy to help you with this!
Our accountants have many years of experience in interacting with both traditional businesses and such types of businesses as:
• Blockchain, cryptocurrency, smart contracts
• Gambling business
• Investment companies and funds
• Business related to the issuance of electronic money
• And much more
Our group of companies includes not only Estonian accountants, but also from many other countries of the world (Great Britain, Latvia, Russia, Hong Kong, UAE, Finland, etc.), which allows our specialists to manage complex international projects and prepare reports in the proper form. We will also prepare the necessary internal procedures for financial reporting for your company in Estonia.
Feel free to call or write to us, preliminary consultation is provided absolutely free!