Question 1

When will arise obligation to have VAT number?

John Doe · Accepted Answer

The VAT registration obligation in Estonia arises from the moment when the company’s sales turnover exceeds 40 000 EUR per calendar year.

At the same time, the company may apply for VAT status before it reaches this amount. The VAT number registration can be initiated after you’ve registered your company. Please take a closer look at our respective service: https://virtualofficeinestonia.com/product/estonian-vat-number/

Question 2

What questions are asked when submitting a VAT application?

John Doe · Accepted Answer

The questions are what the Tax and Customs Board wants to know when accepting the application.

1. Has the desire to register arisen voluntarily or compulsorily?

2. Brief description of business activity, 3-4 sentences.

3. 2-3 main business partners.

4. Sources of business financing: loan, equity or grant?

5. Are there plans to register employees?

Question 3

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

John Doe · Accepted Answer

The Import One-Stop Shop (IOSS) is an electronic platform available from 1 July 2021 that enables businesses to comply with their VAT e-commerce obligations for distance sales of imported goods.

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 at the moment the goods are imported into the EU, which was previously required for goods valued over 22 EUR. The IOSS provides several advantages to sellers, including simplified VAT collection, declaration, and payment procedures for distance sales of imported goods to buyers in the EU. The IOSS also benefits buyers by charging them at the time of purchase, thereby avoiding any unexpected fees upon delivery. If a seller is not registered in the IOSS, the buyer must pay VAT and potentially a customs clearance fee charged by the transporter. Please take a closer look at our respective service: https://virtualofficeinestonia.com/product/ioss-number/

Question 4

What ID cards can be used?

John Doe · Accepted Answer

The following forms of identification are permissible:

Estonian, Latvian, Lithuanian, and Belgian ID cards
Estonian e-resident cards
Estonian Smart ID
Estonian and Lithuanian Mobile IDs

However, it should be noted that legal statuses are subject to change over time. Therefore, it is imperative to remain vigilant and keep abreast of any such developments. Additional info: https://www.youtube.com/watch?v=qPIxhFZcP_Y&t=18s

Question 5

Is getting a VAT number guaranteed?

John Doe · Accepted Answer

Depends on Tax and Customs official evaluation. It will be monitored case by case.

In practice, it is generally the case that if you have had significant problems with the Tax and Customs Board in the past, if you cannot adequately describe your business activities, if you do not have a bank account with an Estonian bank, you will not receive a VAT number. The Tax and Customs Board has the right to request that the person submit additional proof or collect such proof on its own initiative. The proof is any information confirming that the applicant has either commenced business at the place of business stated in the application or has planned to start a business. Such proof can be, for example, preliminary contracts, (commercial lease, procurement, delivery, employment, etc.) contracts, sites for work to be performed, etc.

Question 6

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

John Doe · Accepted Answer

An authorization is a collection of rights within the limits of which a representative may act on behalf of the principal.

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 7

Can a foreign company register for VAT?

John Doe · Accepted Answer

In order to register for VAT, a foreign company must submit an application and extract from the company register of the country where the company is registered.

Of course, it is also necessary to thoroughly describe how the business will be related to Estonia. Documents can be submitted either by a person authorized to represent or by an authorized person under a notarial power of attorney in our office on site. Tax and Customs Board also accept documents sent by post if the specimen signature of the authorized person is notarized or sent digitally signed (digital signature of the authorized person) to our e-mail address emta@emta.ee or submitted to our service office on site.

Question 8

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 9

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 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

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 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 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.

Question 10

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 11

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 12

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.

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