Entrepreneurial consultations: company formation, an address and contact person services, accounting, VAT number, etc. specifically in Estonia, in EU.

FAQ Tag: Accounting

How to authorize an accountant?

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:

  1. Log in to the Business Registry
  2. From the upper bar choose ,,Annual report”
  3. From the bar below choose „Defining persons entering data“
  4. Press the button below „Add new person for entering data“
  5. Fill in the field „Personal identification code of the person entering data”
  6. Select the company you want to add the person entering the data
  7. Click: “The person entering data is authorized to submit the report”
  8. 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.

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What is a company’s annual report?

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:

Basic annual report

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Do I have to pay taxes for employees outside Estonia?

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.

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Do I have to do accounting?

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:

  1. The Accounting Act of the Republic of Estonia – this law outlines the requirements for accounting practices, including bookkeeping, accounting documentation, and financial reporting.
  2. Estonia’s Good Accounting Practices – these guidelines provide recommendations for accounting standards and practices, including financial statement preparation, accounting documentation, and audit procedures.
  3. 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:

Starter accounting

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What data must an invoice contain?

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.

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