Expanded accounting

Negative share capital must be resolved as soon as possible.

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

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, within three months after approval of the annual report, convene a shareholders’ meeting to decide on remedies.

2. Practical ways to restore equity

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

Need help?
We can assist with share‑capital operations, draft resolutions, Business Register filings, or a turnkey liquidation package.

This guide is provided for general information and does not constitute legal advice.

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.

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

1. Tax declarations & VAT, excise, customs, payroll – granted in the Estonian Tax and Customs Board (MTA) self‑service.

2. 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

1. Log in to the MTA self‑service at https://www.emta.ee.

2. Choose your company from the top‑right drop‑down menu (if you have more than one).

3. In the left‑hand menu click Settings → Access permissions → Access permissions of representatives → New access permission.

4. Enter the accountant’s personal ID‑code and (optionally) set an expiry date.

5. 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”.

6. (Optional) To allow your accountant to manage further user rights, search for “right of the representative … to administer user rights” and add it.

7. 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)

1. Log in to https://rik.ee and open My undertakings.

2. From the top bar select Annual Report → Defining persons entering data.

3. Click Add new person for entering data.

4. Enter the accountant’s personal ID‑code.

5. Select the relevant company (if prompted).

6. Tick “The person entering data is authorised to submit the report”.

7. 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.

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

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

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

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.