Q: How does the IOSS number affect Estonian companies?

Simplified operations. An IOSS number (Import One-Stop Shop) helps Estonian e-commerce businesses simplify VAT reporting when selling low-value goods to EU customers. Instead of managing VAT registrations and declarations across multiple countries, IOSS allows you to report and pay VAT through a single monthly return in a single EU Member State. This reduces administrative workload, improves customer delivery experience, and helps avoid VAT issues such as double taxation or unexpected import charges. It is especially relevant for online stores shipping goods from outside the EU to EU consumers.

Question 1

What is the Import One-Stop Shop (IOSS)?

John Doe · Accepted Answer

The Import One-Stop Shop (IOSS) is an EU-wide electronic system.

The IOSS platform enables suppliers and electronic interfaces that sell imported goods to buyers in the EU to collect, declare, and pay VAT to the relevant tax authorities. This eliminates the need for buyers to pay VAT when goods are imported into the EU, which was previously required for goods valued at over EUR 22.

Launched to simplify VAT compliance for businesses involved in distance sales of imported goods to EU consumers.

Through the IOSS, sellers and online marketplaces can collect, declare, and pay VAT for goods imported into the EU—directly to the relevant tax authorities—at the point of sale. This eliminates the prior requirement that buyers pay VAT upon importation.

Benefits for sellers:

Centralised VAT registration for all EU countries.
Simplified VAT reporting and payment.
Improved customer experience by avoiding customs delays and unexpected charges.

Benefits for buyers:

VAT is included upfront in the purchase price.
No hidden fees or customs handling charges at delivery.
Faster and smoother shipping process.

If a seller is not registered with IOSS, the buyer must pay VAT upon delivery and may also incur customs clearance fees charged by the courier or postal service.

The IOSS number is applied for through the Estonian Tax and Customs Board.

Question 2

What ID cards can be used?

John Doe · Accepted Answer

Identification methods.

The following forms of electronic identification are accepted for digital signing and access to Estonian e-services:

Estonian ID card
Estonian e-Residency card
Estonian Smart-ID
Estonian Mobile-ID

For the most up-to-date list and technical requirements, visit www.id.ee.
Please note that accepted identification methods may change over time, so it's important to stay informed of any updates.

Additional info: https://www.youtube.com/watch?v=qPIxhFZcP_Y&t=18s

Question 3

How does the IOSS number affect Estonian companies?

John Doe · Accepted Answer

Simplified operations.

An IOSS number (Import One-Stop Shop) helps Estonian e-commerce businesses simplify VAT reporting when selling low-value goods to EU customers. Instead of managing VAT registrations and declarations across multiple countries, IOSS allows you to report and pay VAT through a single monthly return in a single EU Member State.

This reduces administrative workload, improves customer delivery experience, and helps avoid VAT issues such as double taxation or unexpected import charges. It is especially relevant for online stores shipping goods from outside the EU to EU consumers.

Question 4

Who is responsible for accurate accounting data?

John Doe · Accepted Answer

The management board is always responsible for providing complete and correct source documents; the accountant is responsible for processing those documents in accordance with Estonian GAAP and tax law.

Can we catch up on previous periods?

Yes. We routinely perform “catch‑up accounting” (tagantjärele raamatupidamine) for businesses that have fallen behind on bookkeeping or need to reconstruct ledgers before an audit, sale, or liquidation. Typical scope

Document collection & gap list – we map missing invoices, expense receipts, bank statements.
Data entry & reconciliation – post all transactions, reconcile banks, payables, receivables, inventory.
Tax corrections – prepare or amend VAT, payroll and TSD returns if needed.
Financial statements – produce compliant balance sheet & income statement for each outstanding year.

How to start?

Contact us with a brief description of the backlog (years & estimated transactions).
We send a document checklist and NDA.
Once we receive your materials we issue a detailed quote.

Need assistance? Contact us for a fixed‑fee quote.

This information is general in nature and does not constitute legal advice.

Question 5

What to do with negative share capital (net assets)?

John Doe · Accepted Answer

Negative share capital must be resolved as soon as possible.

Below is a practical roadmap that aligns with the requirements of the Commercial Code (Äriseadustik) and common market solutions.

1. When is equity “too low”?

Under Commercial Code § 176(2), the company’s net assets must be at least:

50 % of registered share capital, and
not less than the minimum share‑capital requirement (currently € 2 500 for OÜs).

Example:
An OÜ with a registered capital of €2 500 must keep equity ≥ €2 500 (100 %).

If the balance sheet shows that equity is below either limit (often expressed as negative share capital), the board must convene a shareholders' meeting within three months after approval of the annual report to decide on remedies.

2. Practical ways to restore equity

Issue new shares/owner cash injection – quickest textbook fix.
Convert shareholder loans into equity (set‑off contribution).
Revalue (upwards) real estate or IP – allowed if a fair‑value report substantiates it.
Cut costs & improve margins – demonstrate turnaround in the next financial year.
Sell non‑core assets – realise gains, book profit.
Reduce share capital to a minimum (€2 500) and cover the rest via profit or later capital increase.

Tip: Make sure any capital manoeuvre is properly documented, entered in the accounting ledgers and registered in e-Business Register.

3. Exit scenarios

Sell the company – shares can be transferred to a buyer who is willing to recapitalise. Ensure the SPA allocates responsibility for past debts.
Liquidate – a clean way to close down if there is no buyer or business rationale. Requires publishing a creditor notice and preparing a final balance sheet.
Turnkey liquidation service – we can handle filings, creditor notices, accounting & tax clearance (fees start around €300–€1 000).

4. When will the share capital be returned?

Only the paid-in share capital may be returned to the owner, and this may occur no earlier than 4 months after the liquidation process begins. The return can include both the registered share capital and any remaining funds in the company’s bank account, provided all legal obligations have been fulfilled.

NB!

In Estonia, for a Private Limited Company (OÜ), the €2,500 minimum share capital requirement was abolished in February 2023, meaning the share capital can be as low as €0.01; however, founders become personally liable for the difference if assets fall short of €2,500 in bankruptcy. For a Public Limited Company (AS), the minimum remains €25,000.

Question 6

What data must an invoice contain?

John Doe · Accepted Answer

An invoice is a primary accounting document.

The document must clearly identify the parties, the date, and the economic substance of the transaction, otherwis,e it is not accepted as a valid source document. E-invoices are fully acceptable as long as integrity and authenticity are guaranteed. Adding extras such as the payment reference or due-date is not compulsory, but it helps cash-flow management. Only a VAT-registered business may add VAT to its invoice.

Document title (e.g. “Invoice”)
Unique invoice number and date of issue
Seller’s and buyer’s name, address, registry code, VAT ID (if any)
Description of goods/services, quantity, unit price, VAT rate, net and gross amount
Date of delivery/performance if different from the invoice date

2. Language of source documents

Invoices may be issued in Estonian or English.
Documents in any other language must be accompanied by a sworn translation into Estonian or English to be accepted by auditors or the Tax and Customs Board (MTA).

3. Proving the business purpose

Under both the Accounting Act and the Income Tax Act, an expense is deductible only if it is business‑related and substantiated.
If the invoice alone does not make the business purpose evident (e.g. taxi, parking, travel tickets), add explanatory information such as:

project or client name;
employee name & business trip dates;
licence plate number of the company car, etc.

Lacking or incomplete documentation may lead to the expense being treated as a non‑business cost, subject to fringe‑benefit or dividend tax.

This guide is for general information only and does not constitute legal advice. For complex situations consult a professional accountant or tax adviser.

Question 7

How to give representation rights in the Estonian Tax and Customs Board?

John Doe · Accepted Answer

An authorisation sets the limits for a representative’s actions.

An authorisation is a defined set of rights that determines the scope within which a representative may legally act on behalf of the principal. It outlines what actions the representative is permitted to take and under what conditions, ensuring legal clarity and accountability for both parties. It is essential for the Estonian Tax and Customs Board that the content of authorization would be understandable and the person granting the authorization and the authorized person would be identifiable. The main and also the most convenient and practical way to transfer the right of representation is to do it through a suitable digital identification channel. These are Mobile ID, Estonian ID, e-resident ID, and Smart ID. European Union country ID cards are also suitable. It is important to have the right to log in to the systems of the Estonian state. If necessary, other less convenient and more expensive methods can also be used: power of attorney, lawyer's client agreement, etc. Additional info: https://www.youtube.com/watch?v=uKJ3zgS5oTc&t=4s

Question 8

How to authorise your accountant in the Estonian e‑services

John Doe · Accepted Answer

Accountant needs two separate sets of e‑service rights to act on behalf of your company:

Tax declarations & VAT, excise, customs, payroll – granted in the Estonian Tax and Customs Board (MTA) self‑service.
Preparation and submission of the annual report – granted in the Business Register (Rik.ee) environment.

Below you will find step‑by‑step instructions for both systems.
(If you prefer a video, see the MTA walkthrough at the end of this article.)

1. Give an accountant access in the MTA self‑service

Prerequisites
• The board member has an Estonian ID‑card, Mobile‑ID or e‑Residency digital ID.
• You know the accountant’s Estonian personal identification code (isikukood).

Step‑by‑step

Log in to the MTA self‑service at https://www.emta.ee.
Choose your company from the top‑right drop‑down menu (if you have more than one).
In the left‑hand menu click Settings → Access permissions → Access permissions of representatives → New access permission.
Enter the accountant’s personal ID‑code and (optionally) set an expiry date.
Select rights:
- Package method – scroll to the bottom, press Search, tick e.g. Accountant Package (includes submission of all tax returns) and press Add.
- Separate rights – open the Separate access permissions tab if you need custom scope (e.g. only VAT returns). Most useful rights are grouped under “Over‑areas”.
(Optional) To allow your accountant to manage further user rights, search for “right of the representative … to administer user rights” and add it.
Press Save. Access is active immediately.

### Troubleshooting

If the person is not found, double‑check the ID‑code or ask the accountant to log in to MTA once (this creates a user profile).
Remember to update or revoke rights if you switch service providers.

2. Authorise the accountant in the Business Register (for the annual report)

Log in to https://rik.ee and open My undertakings.
From the top bar select Annual Report → Defining persons entering data.
Click Add new person for entering data.
Enter the accountant’s personal ID‑code.
Select the relevant company (if prompted).
Tick “The person entering data is authorised to submit the report”.
Press Save.

Important: The filed report must still be digitally signed by at least one board member before it is deemed submitted.

3. Video tutorial

MTA access‑rights setup – 3‑minute video

This guide is for general information only and does not constitute legal advice. Procedures may change – always refer to the latest instructions on the official websites of the MTA and the Business Register.

Question 9

Annual report deadlines in Estonia

John Doe · Accepted Answer

Submission of the annual report is mandatory in any case.

Every Estonian legal entity – including micro‑sized OÜs owned by e‑residents – must file an annual report (majandusaasta aruanne) with the Business Register within 6 months after the end of its financial year (Commercial Code § 60).

Typical deadline: If your financial year = calendar year, the report is due 30 June of the following year. To change the FY you must submit a shareholders’ resolution and amend the articles in the Business Register before the new FY starts.

1. What must be included?

Estonian GAAP (Estonia’s Good Accounting Practice) recognises four size categories. Reporting requirements scale with size: The size of the company determines which statements are required: micro-entities file only the balance sheet and income statement, whereas small entities add a cash-flow statement and management report, and larger ones include changes in equity and often an audit.

Most of our clients fall under micro or small category.

2. Penalties for late filing

Delay	Sanction
Up to 3 months	Warning letter & initial fine (typically €200–€300)
Over 3 months	Repeated coercive fines up to €3 200 total
Persistent non‑compliance	Court‑ordered compulsory dissolution of the company

Late filing also raises red flags with banks and partners; keep your compliance record clean.

3. Best‑practice timeline (calendar‑year FY)

Month	Task
Jan‑Feb	Close previous FY in accounting; reconcile balances
Mar	Draft financial statements; collect supporting documents
Apr	Management review; prepare notes & management report
May	Board approves package; send to auditor (if required)
Jun	Shareholders’ meeting adopts the report; board member signs; submit by 30 Jun

Submitting early avoids last‑minute e‑system congestion.

Need assistance? Contact us for a fixed‑fee quote.

This overview is for general information only and not legal advice. Always check current laws and the Business Register instructions.

TEENUSED