Question 1

Who is responsible for accurate accounting data?

John Doe · Accepted Answer

Estonian law makes a clear distinction:

Party	Main duties	Legal basis
Client / Management Board	• Provide complete, truthful and timely source documents (invoices, contracts, bank statements, receipts, etc.).
• Ensure underlying business transactions are legitimate.
• Approve financial statements and bear ultimate responsibility for their correctness.	Accounting Act § 6
Commercial Code § 180
Accountant	• Record transactions in accordance with the Accounting Act, Estonia’s Good Accounting Practice and tax laws.
• Safeguard data integrity and confidentiality.
• Flag inconsistencies or missing documents to the client.	Accounting Act § 3 & § 6

If inaccurate or incomplete source data is supplied, the board members – not the accountant – are liable for any resulting tax penalties or legal consequences. Conversely, an accountant who misapplies valid data can be held professionally liable.

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.
Submission – file amended tax returns and overdue annual reports.

Pricing model

Our fee is based on the number of transactions per period and the effort to track down missing documents:

Transactions per FY	Indicative fee (excl. VAT)
≤ 300	from €450
301–800	from €850
801–2 000	custom quote

Large backlogs, multi‑currency accounts or poor document quality may increase the scope. After an initial assessment we provide a fixed quote with no surprises.

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 within 3 business days.

FAQ

Question	Answer
Do I risk a tax audit if I file late returns?	Correcting the past voluntarily is viewed favourably by the Tax Board. Penalties apply mainly if errors are found during an audit.
Can you work with paper receipts?	Yes, but scanning costs extra. We recommend using mobile apps to photograph receipts.
What if some documents are lost?	We help reconstruct transactions using bank data and counterparty confirmations, but some costs may become non‑deductible.

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

Question 2

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

John Doe · Accepted Answer

When the net assets (equity) of an Estonian private limited company (OÜ) fall below the statutory threshold, the board and shareholders must act quickly to avoid personal liability and, in the worst case, compulsory dissolution.

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 share capital of €10 000 must keep equity ≥ €5 000.
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. Legal options (Commercial Code § 176)

#	Option	Typical use‑case	Key steps
1	Increase share capital	Profitable business, owners willing to invest	– Cash or non‑monetary contribution
– Register change with the Business Register
2	Reduce share capital	Company permanently downsized	– Adopt resolution (2/3 majority)
– Creditor notice & 3‑month wait
– Register reduction
3	Combine increase & reduction	Clean balance sheet and optimise capital structure	Sequence matters: usually reduce first, then increase
4	Merger or division	Part of group restructuring	Follow merger/division procedure; assets & liabilities move to new entity
5	Reorganisation (transformation)	Convert OÜ → AS, SE, etc.	Rare; governed by Ch. 10 of the Code
6	Voluntary liquidation	No future business planned	Two‑step shareholders’ resolution; liquidation takes ~6–9 months
7	Bankruptcy filing	Insolvent and cannot restore equity	Board must file immediately if insolvency is evident

3. 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.

4. 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 – professional firms can handle filings, creditor notices, accounting & tax clearance (fees start around €300–€1 000).

5. Director’s liability

Failure to address negative equity may expose the board to personal liability for damages (Commercial Code § 187) and fines. Timely action and documented shareholder decisions are therefore crucial.

6. Frequently asked questions

Question	Answer
Can I operate with negative equity until next year?	Legally you may, but board must call an EGM within 3 months of the annual report approval; ignoring may lead to compulsory dissolution.
Does the €0 share‑capital option introduced in 2023 change the equity rule?	No. Even if the registered capital is €0, the moment you distribute dividends or raise capital to > €0, the net‑asset test and €2 500 minimum apply.
Is shareholder loan conversion taxable?	Generally no income tax, but check VAT/tax implications if asset contributed.

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 3

What data must an invoice contain?

John Doe · Accepted Answer

Estonian legislation lays down a minimum set of compulsory details.

That have to appear on every sales invoice so that it qualifies as a valid source document (raamatupidamisalusdokument) for accounting and tax purposes.

The key acts are:

Accounting Act (Raamatupidamise seadus) § 7
Value‑Added Tax Act (KMS) § 37(7)

1. Mandatory invoice details

#	Required information	Legal basis	Notes
1	Title – e.g. Invoice, Credit Invoice	Accounting Act §7(3)	Must clearly indicate the nature of the document.
2	Unique invoice number	Accounting Act §7(3)	Sequential and gap‑free numbering system.
3	Date of issue	Accounting Act §7(2)	‘Time of occurrence’ of the transaction.
4	Supplier (seller) details	Accounting Act §7(3) & VAT Act §37(7)	Legal name, registry code, address, VAT‑ID (if registered).
5	Customer (buyer) details	Accounting Act §7(3) & VAT Act §37(7)	Legal name, address, VAT‑ID (if applicable).
6	Description of goods/services	Accounting Act §7(2)	Should be sufficiently specific.
7	Quantity & unit price	Accounting Act §7(2)	For services describe scope or period.
8	Net amount (per line and total)	Accounting Act §7(2)
9	VAT rate(s) and VAT amount(s)	VAT Act §37(7)	Zero‑rated or exempt must be marked as such.
10	Total amount payable	Accounting Act §7(2)	In euros unless another currency is justified.
11	Payment due date / terms	Best practice	Not mandatory but highly recommended.
12	Time of supply (if different from issue date)	VAT Act §11	Required when delivery date differs.

Tip: Electronic invoices (e‑invoices) are fully acceptable if integrity and authenticity are guaranteed.

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.

4. Special cases & simplified invoices

Scenario	Can input VAT be deducted?	Conditions
Cash‑register receipt (kviitung)	No	A receipt alone is not a valid VAT invoice.
Simplified invoice ≤ 160 € (incl. VAT)	Yes	Must still show: issue date, supplier’s data + VAT‑ID, goods/services description, VAT rate & amount, total. Recipient may write their own name & VAT‑ID on the invoice.
Passenger transport, parking machine, unmanned fuel pump, etc.	Yes (limited)	Recipient must add their name & VAT‑ID; must prove business use.

5. Checklist before posting an invoice

Are all mandatory fields present and legible?
Do the figures add up correctly (net, VAT, total)?
Is the business purpose documented (if not obvious)?
Is the invoice in Estonian or English (or accompanied by a sworn translation)?
Is the invoice reviewed & approved according to your internal controls?

Non‑compliant invoices

If the source document is missing compulsory data, you may:

ask the supplier to re‑issue or correct the invoice; or
annotate missing contextual info yourself (date, project, car number, etc.), provided the core data required by law are already present.

However, you cannot deduct input VAT or recognise the cost as tax‑deductible while key requisites are missing.

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

Question 4

How to authorise your accountant in the Estonian e‑services

John Doe · Accepted Answer

Professional accountants usually need 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 (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. Frequently asked questions

Question	Answer
Can I grant access to a foreign accountant without an Estonian ID?	Currently no. The representative needs an Estonian personal ID‑code and e‑ID. For non‑resident accountants consider granting limited view‑only access or exporting data.
Can I limit rights to one service (e.g. payroll only)?	Yes – choose Separate access permissions and add only the needed modules.
How do I check what rights are active?	In MTA go to Settings → Access permissions of representatives and click the person’s name. In Rik.ee check Persons entering data list.

4. 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 5

Annual report deadlines in Estonia

John Doe · Accepted Answer

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.

1. Financial‑year basics

Scenario	Financial year	Filing deadline
Standard case	01 Jan – 31 Dec	30 Jun next year
Non‑calendar FY (e.g. 01 Jul – 30 Jun)	Custom period	6 months after FY end
First FY after incorporation	Incorporation date → chosen FY end (max 18 months)	6 months after FY end

To change the FY you must submit a shareholders’ resolution and amend the articles in the Business Register before the new FY starts.

2. What must be included?

Estonian GAAP (Estonia’s Good Accounting Practice) recognises four size categories. Reporting requirements scale with size:

Size class	Thresholds (any two exceeded → next class)	Core statements	Notes & other disclosures	Management report
Micro	• Assets ≤ €175 k
• Revenue ≤ €50 k
• Liabilities ≤ equity
• 1 shareholder who is also sole director	– Balance sheet
– Income statement	– Accounting policies
– Employee count
– Related‑party info	Not required
Small	• Assets ≤ €4 m
• Revenue ≤ €8 m
• Employees ≤ 50 (avg)	+ Cash‑flow stmt (optional if indirect method impractical)	Full set of notes per Accounting Act	Yes
Medium	Assets ≤ €20 m; Revenue ≤ €40 m; Employees ≤ 250	– BS, IS, CF, Equity changes	Notes + management report	Yes + Auditor if 2/3 thresholds exceeded
Large	Exceeds medium	Same as medium	Notes + mgmt report	Yes + Statutory audit

Most of our clients fall under micro or small category.

3. 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.

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

Month	Task
Jan‑Feb	Close previous FY in accounting software; 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.

5. Key accounting frameworks

Accounting Act – bookkeeping, source documents, reporting.
Estonia’s Good Accounting Practice – national GAAP.
Accounting Board guidelines – interpretations & detailed rules.

Solid day‑to‑day bookkeeping is the foundation of a clean annual report. We help micro and small OÜs keep ledgers in shape and file on time.

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.

Question 6

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 7

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 8

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 9

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 10

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 11

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 12

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.

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