Question 1

Who is responsible for accurate information?

John Doe · Accepted Answer

Client and accountant together.

The client is responsible for ensuring that the raw data provided is true and the accountant is responsible for ensuring that the raw data has been used lawfully according to law.

Question 2

What to do with negative share capital?

John Doe · Accepted Answer

The Estonian Commercial Code states that it needs to be raised.

If a private limited company has less than half of its share capital or less than the amount of share capital specified in § 136 of this Code or the other minimum amount of share capital provided by the law, the shareholders shall decide: 1) Reduction or increase of share capital 2) The dissolution, merger, division or transformation of a private limited company 3) Submission of a bankruptcy petition We can help with the terminal liquidation process. Please take a closer look at our respective service: https://virtualofficeinestonia.com/product/company-termination/

Question 3

What reports must be shown in the annual report?

John Doe · Accepted Answer

The information you need to provide in the annual report depends on the size of the company.

For example, micro- and small businesses are required to provide a balance sheet, income statement, cash flow report, activity report, and specifically required notes: accounting principles, number of employees, and information about related parties. Our customers are mostly micro and small companies. A micro-enterprise is a private limited company with total assets of up to 175 thousand euros, liabilities not exceeding equity, and annual sales revenue of up to 50 thousand euros. The micro-enterprise has one shareholder who is also a member of the management board. The micro-enterprise does not have to submit an activity report in the annual report and the number of annexes is also minimal. A small company is a company with total assets of up to 4 million euros, annual sales of up to 8 million euros, and an average number of employees of up to 50 people, one of which may be exceeded.

Question 4

What language must the source documents be?

John Doe · Accepted Answer

Regarding the Estonian accounting law we accept the source documents in Estonian and English language.

Original documents in other languages must be sworn translated into the above languages, otherwise they cannot be accepted. There are certain restrictions for source documents, take a look at information about requirements.

Question 5

What is a company’s annual report?

John Doe · Accepted Answer

An annual report is the company’s financial statement of the past financial year.

All legal entities need to submit an annual report in Estonia – which of course includes companies owned by e-residents. Under the Commercial Code (see § 60), it’s mandatory to submit the report even if the company doesn’t have any activities during the financial year. It must be prepared in Estonian and in the official currency (EUR).

The deadline is six months after the financial year is over. Usually at late last day of June. But it is always wise to do it early.

The annual report can be submitted remotely if you have an Estonian e-residency card, Estonian ID card, Estonian Mobile ID or Smart ID. In other cases, the services of a public notary must be used.

All, but micro-enterprises must also include the management report. Larger companies must submit a cash flow statement and a statement of changes in equity. In certain cases, an auditor’s evaluation is mandatory.

Keep in mind that anyone can access the management reports. Therefore, consider carefully what the report contains.

Please take a closer look at our respective service:

https://virtualofficeinestonia.com/product/basic-annual-report/

Question 6

What data must an invoice contain?

John Doe · Accepted Answer

The law establishes what data must be present on the invoice so that it complies with the Estonian Accounting Legislation.

The following information needs to be written on invoices:

Title (e.g. “Invoice” or similar)
Invoice number
Date of issue
Description of goods or services purchased
Numerical data (amount, price of a unit, total sum)
Names of the seller and buyer
Addresses of the seller and buyer
Seller’s company registration number
Seller’s VAT number (in case the seller has it)

There are certain restrictions for source documents, take a look at information about requirements.

Question 7

What are the requirements for expense documents?

John Doe · Accepted Answer

Legislation states that only business-related expenses can be included in the company's reporting. Non-related expenses are treated as non-purpose based on the Estonian Accounting legislation and are taxed with an additional preferential tax.

They must include:

Date of issue
Receipt number
Description of goods or services purchased
Numerical data (amount, price of unit, total sum)
Name of the seller
Address of the seller
Seller’s company registration number
Seller’s VAT number (in case the seller has it)

They can be transmitted to us through various communication channels, preferably through various applications that automatically add them to the accounting software.

Question 8

What are annual report deadlines in Estonia?

John Doe · Accepted Answer

In most cases, the financial year is the same as the calendar year in which case the deadline is the last day of June.

In special cases, a different period may be set for the financial year. Submitting an annual report is mandatory for all the companies registered in Estonia, within 6 months from the end of the company's financial year. Please take a closer look at our respective service: https://virtualofficeinestonia.com/product/annual-report/

Question 9

How to give the accountant representation rights at the Tax and Customs Board?

John Doe · Accepted Answer

Necessary to submit tax returns on behalf of the company.

Login to the Estonian Tax and Customs Board. Choose your company.

On the left side, there will be "Settings", follow these steps:

Access Permissions -> Access permissions of representatives> New Access permission.

There is necessary to add the identification code of the representative there. That's 11253141 for that.

The following page opens, where you can add an expiration date if necessary.

Additional data

If you want to add access rights as a package eg Accountant Package, Customs Package, Excise Package, Send data through system-to-system interface, etc., you need just to scroll to the bottom of the page and click on search. Five packages appear. Please mark the desired package (s) and click on add.
If you want to add separate access permissions, you must select the separate access permissions tab. The most exploitable access permissions are in the "over areas " area
If you want to add user management permissions, select the separate permissions tab, enter "right" in the name box to simplify the search, and press the search button. There appear several access permissions. The permission you need to add in such a case is: "The right of the representative of the legal person to administer the user rights of applications".

Comprehensive and bulky manual: https://www.emta.ee/eng/information-and-news-e-mta/instructions-using-e-services/access-permissions-and-authorisations-e-mta

Video manual

https://www.youtube.com/watch?v=uKJ3zgS5oTc&t=14s

Question 10

How to authorize an accountant?

John Doe · Accepted Answer

Annual reports are submitted in the e-environment of the business register.

If you have an Estonian ID, Mobile ID, or e-residency, the right of representation can be granted with the following steps:

Log in to the Business Registry
From the upper bar choose ,,Annual report''
From the bar below choose „Defining persons entering data“
Press the button below „Add new person for entering data“
Fill in the field „Personal identification code of the person entering data”
Select the company you want to add the person entering the data
Click: “The person entering data is authorized to submit the report”
Push the „Save“ button below

Now your accountant can enter your annual report data and submit it.

It should also be noted that the submitted report must also be digitally confirmed by a board member.

Question 11

Do I have to pay taxes for employees outside Estonia?

John Doe · Accepted Answer

No, you don’t.

If the company has employees who are not tax residents of Estonia and work outside Estonia, the salary payments to these foreign employees are not taxed in Estonia, and we do not file tax returns for these employees. Foreign employees must declare their income on behalf of an Estonian company in the country in which they are taxable.

Question 12

Do I have to do accounting?

John Doe · Accepted Answer

Yes, it's mandatory. When operating a business in Estonia, it is essential to comply with local accounting and legal standards to ensure that your company is adhering to the best practices in accounting.

Keeping your books in order is crucial to providing financial transparency to your creditors and business partners and ensuring the accurate calculation of taxes. There are three main accounting policies that you must follow in Estonia:

The Accounting Act of the Republic of Estonia - this law outlines the requirements for accounting practices, including bookkeeping, accounting documentation, and financial reporting.
Estonia’s Good Accounting Practices - these guidelines provide recommendations for accounting standards and practices, including financial statement preparation, accounting documentation, and audit procedures.
The guidelines issued by the Accounting Board of the Republic of Estonia - this is an advisory board that issues guidance on accounting practices and standards, including the interpretation of accounting regulations and the development of new accounting principles.

By adhering to these accounting policies, you can ensure that your company's financial information is accurate and transparent. Moreover, accounting is the basis for preparing the annual report. Submission of the annual report is mandatory, if not submitted, the state imposes a fine, and in some cases also forced termination. Check out our corresponding service: https://virtualofficeinestonia.com/product/starter-accounting/

Question 13

Debitors managment procedure

John Doe · Accepted Answer

Standard Procedure for Non-Payment of Services:

The established protocol for addressing non-payment of services typically involves several steps to ensure a fair resolution. These steps are as follows:

Reminder Letter: A formal communication is sent to the debtor, notifying them of the outstanding payment and requesting immediate settlement. The letter serves as an initial reminder and allows the debtor an opportunity to rectify the situation promptly.
Repeated Reminder Letter: In the event that the debtor fails to respond or settle the outstanding amount after the initial reminder, a subsequent reminder letter is sent as a follow-up measure. This letter reiterates the urgency of payment and emphasizes the potential consequences of continued non-compliance.
SMS Reminder: In addition to written communication, a text message reminder is commonly employed as a supplementary means of notification. This method aims to further prompt the debtor to take immediate action in resolving the unpaid balance.
Register of Debtors: If the debtor remains unresponsive or persistent in non-payment, their details may be recorded in a register of debtors. This record serves as a reference for future actions and ensures transparency within the process.
Court Proceedings: Should the previous steps prove ineffective, legal action may be pursued through court proceedings. This involves initiating a formal lawsuit against the debtor, presenting the case before a judge or magistrate, and seeking a legal judgment in favor of the owed amount.
Bailiff or Debt Collection Company: If necessary, following a court judgment, the services of a bailiff or a reputable debt collection company may be enlisted. These professionals are authorized to take further action to recover the owed funds, which may include seizing assets, enforcing payment plans, or implementing other legal measures.

It is important to note that throughout this process, initial transaction costs incurred as a result of pursuing the outstanding payment will be included. Additionally, as the proceedings progress, state fees and bailiff costs, which are associated with legal action and the involvement of authorized officials, will be added to the outstanding balance.

Question 14

Can you arrange accounting from previous periods?

John Doe · Accepted Answer

We are able to provide accounting services for previous periods upon request.

Our pricing model is based on the number of transactions involved. For more information on pricing and to discuss any special requirements, please feel free to contact us. We will be pleased to provide you with a customized pricing solution. Related product: https://virtualofficeinestonia.com/product/basic-annual-report/

Question 15

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 16

What is EORI Number?

John Doe · Accepted Answer

The Economic Operators Registration and Identification System, commonly referred to as EORI, is a registration system that is mandatory for companies engaged in importing or exporting goods from or to non-EU countries within the EU.

The EORI code is specific to the country where the company is established and is required for customs clearance procedures. For instance, if an Estonian company imports goods directly to Germany, it is still required to obtain an EORI number in Estonia, as this is where the company is registered. This ensures compliance with the EU's customs regulations and facilitates the efficient movement of goods across borders. The validity or invalidity of an EORI number can be checked by visiting the "Confirmation of EORI Number". In cases where the concerned person has authorized the disclosure of their information, it is possible to conduct a search for the name and address of the company or individual associated with that EORI number.

Question 17

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 18

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 19

What should I do if my IOSS number is cancelled or expires?

John Doe · Accepted Answer

If your IOSS number is canceled or expires, you should immediately contact the Estonian Tax and Customs Board. Understand the reason for cancellation or expiration.

Find out how to reapply or renew your IOSS registration. Continuing to sell goods in the EU without a valid IOSS number could lead to non-compliance with VAT regulations.

It may also result in potential penalties.

Question 20

What is an IOSS number and how can I apply for it?

John Doe · Accepted Answer

The Import One-Stop Shop (IOSS) number is designed to simplify VAT payments for cross-border e-commerce transactions within the EU. Estonian businesses can apply for an IOSS number through the Estonian Tax and Customs Board website. This registration allows businesses to manage VAT collection more efficiently when selling goods to other EU member states.

Question 21

What are the requirements and obligations associated with the IOSS number?

John Doe · Accepted Answer

Companies using the IOSS number must maintain accurate records of all eligible sales for ten years. They need to make these records available upon request by any EU member state. Businesses are also required to ensure that the VAT charged at checkout is correctly calculated based on the buyer’s location. Compliance with these requirements is crucial for maintaining the validity of the IOSS registration.

Question 22

How does the IOSS number affect Estonian companies?

John Doe · Accepted Answer

The IOSS number helps Estonian companies streamline the VAT collection process. It simplifies the declaration process when selling goods to other EU countries. It helps avoid double taxation. It simplifies administrative procedures. This is achieved by allowing businesses to report and pay VAT in a single monthly return, regardless of the EU countries to which they ship.

Question 23

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 24

What are other possibilities for NPA formation?

John Doe · Accepted Answer

Registration through a Public Notary in place or with a power of attorney comes at different prices:

Nonprofit association formation via Public Notary – 190 EUR
Nonprofit association formation by a Power of Attorney – 390 EUR

Question 25

Is the number of NPA establishers regulated?

John Doe · Accepted Answer

According to the Non-Profit and Foundations Act, there must be at least two founders.

The number of board members is not limited. Founders can be both natural and legal persons.

Question 26

In what form are the documents of incorporation handed over?

John Doe · Accepted Answer

If a company or nonprofit association is established remotely, no documents will be received on paper immediately.

Each founder can download and print copies of the commercial register free of charge. In the exceptional case, if the incorporation takes place with a Public Notary, then the verified documents on paper can also be received. If there is a need to use these papers abroad, they must be legalized through the apostille: https://virtualofficeinestonia.com/product/apostilled-documents/

Question 27

How quickly the service is activated?

John Doe · Accepted Answer

Upon order and payment services are activated in 24 hours.

However, please note that in certain cases, such as when a signed contract and KYC documents are required, the activation of the service may be subject to the timely provision of these additional materials. Our team will promptly inform you of any such requirements and work with you to ensure a smooth and efficient activation process.

Question 28

Can the founders themselves define the goals and areas of activity of the NPA?

John Doe · Accepted Answer

This can be done additionally.

This can be defined in the memorandum and articles of association. Together with the already predetermined option set based on EMTAK. We will draw up an establishing contract and articles of association. The Estonian Classification of Economic Activities (EMTAK) is the national version of the international harmonized NACE classification. EMTAK has a hierarchical structure, being divided into five levels. The first four levels conform to the NACE structure and the fifth level is the national level, established according to the specifics of the Estonian economy and the relevant legislation. Additional info: https://virtualofficeinestonia.com/ufaqs/field-of-activity/

Question 29

Can nonprofit associations conduct a business activity?

John Doe · Accepted Answer

Basically, yes, if the activity is related to the goals of the association.

However, it should not be the only source of income. The main part or some part must still usually come from subsidies and membership fees.

Question 30

But the establishment of a foundation?

John Doe · Accepted Answer

The foundation cannot be established remotely.

Establishing documents must be verified with Public Notary on site in Estonia or we must have Power of Attorney from you to act on your behalf.

Question 31

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 32

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 33

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 34

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 35

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 36

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 37

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 38

Who activates the roaming in the card?

John Doe · Accepted Answer

It is imperative to activate the SIM Card roaming before sending it abroad.

Our company ensures that the SIM card is activated in Estonia before dispatching it to the customer. If there are any obstacles during the activation process, our service provider, Telia (www.telia.ee), can provide assistance. Please note that any issues arising after the SIM card has been dispatched are the responsibility of the customer and should be addressed directly with the service provider.

Question 39

What is your advantage over competitors?

John Doe · Accepted Answer

A physical, tangible SIM card is

required by numerous service providers (such as Google, and LinkedIn, among others) as they do not recognize virtual numbers within several of their control systems.

Question 40

How to start with the SIM Card?

John Doe · Accepted Answer

To commence usage of the prepaid card, simply insert the SIM card into your mobile device, turn it on, and enter the designated PIN code of 0000.

The usage time of the card commences upon activation, which is achieved by initiating a call. Roaming capabilities have been enabled within Estonia, providing further convenience and ease of use for travelers and locals alike. The starter kit for the prepaid card includes an initial balance of 1 EUR. The card remains active for a period of 180 days from the day of activation or top-up with a minimum of 3 EUR. After the 180-day period has lapsed, the card will still enable the user to answer incoming calls, read messages, make calls to the Estonian emergency number 112, and top up the card for an additional 30 days. This arrangement affords users greater flexibility and autonomy in managing their communication needs.

Question 41

How do charge talk time?

John Doe · Accepted Answer

The process of charging, or adding credit to an account, is a straightforward and convenient procedure.

It can be accomplished remotely through various means, such as accessing the Telia portal or utilizing the Telia app. Additionally, Telia offers a global option to purchase calling time, allowing for seamless communication across international borders. These multiple avenues for charging facilitate accessibility and flexibility for users, while also ensuring consistent and reliable service from Telia.

Question 42

Call rates?

John Doe · Accepted Answer

There exist various pricing options, with the ultimate determination of such prices being made by the service provider Telia.

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Nonprofit association

Formation of a nonprofit association