Every Estonian legal entity subject to accounting obligations is required to submit an annual report.

As the deadline for most companies is last day of June it’s essential to understand the legal requirements and potential consequences of late filing.

🗓 When Is the Annual Report Due?

Companies must file their annual report within six months after the end of their financial year. For the vast majority of Estonian companies whose financial year ends on December 31, this means the deadline is the end of June each year.

Failure to meet this deadline may result in a fine issued by the registrar (Tartu County Court registration department) or even the initiation of deletion proceedings from the commercial register.

📑 What Does the Annual Report Include?

An annual report generally consists of:

• the financial statements (balance sheet, income statement, cash flow statement, and equity changes, depending on company type and size),
• and a management report (overview of business activities and performance).

Larger companies may also be subject to statutory audit requirements if they exceed certain thresholds in turnover, assets, or employee numbers.

Reports must be filed electronically via the e-Business Register. Submission via a notary is also possible, but less common.

💸 Profit Distribution and Dividends

The management board is obliged to submit a profit distribution proposal alongside the annual report. Shareholders or members will then decide whether to approve the profit allocation based on the approved annual report.

Dividends may only be paid out if:

• the annual report is approved;
• a valid profit distribution decision is adopted;
• and the net assets exceed the total share capital and statutory reserves as required by law and the articles of association.

If the report materially misrepresents the company’s financial situation, any profit distribution decision may be considered null and void by the court, and the company has legal grounds to refuse dividend payments.

⚠️ Penalties for Late Submission

Although the registrar may issue a fine immediately after the deadline, the usual practice involves sending a warning first. If the report is still not submitted, a formal penalty order follows.

The registrar can impose multiple fines until the obligation is fulfilled. The size of the fine depends on the length and frequency of the delay, with a maximum fine of €3,200. Board members and shareholders may also be fined.

🗑 Risk of Deletion from the Commercial Register

A new Commercial Register Act, effective from February 1, 2023, grants the registrar enhanced authority to remove inactive companies more efficiently.

Under the new law:

• if a company fails to submit the report even after a 3-month warning period, and
• meets the criteria for deletion (e.g. no debts or assets),

…the registrar may remove it from the register.

Previously, deletion proceedings could take up to two years. Now, the consequences can take effect in just a few months.

However, a company may restore its registration by submitting the missing report and applying for reinstatement within 3 years.

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Conclusion

Filing the annual report is a legal obligation—not just a formality. Missing the deadline can result in severe consequences, including fines and removal from the Business Register. Companies are encouraged to act early and ensure their documentation is properly submitted via the e-Business Register.