What to know about annual accounts in Estonia

Upcoming changes in submission of annual accounts in Estonia

The Ministry of Justice of the Republic of Estonia has sent to the Government of Estonia a bill regarding changes in submission of the annual accounts.

The Bill proposes that annual accounts should be submitted to the Tax and Customs Board not to the registration department of the county court, this would enable the Tax and Customs Board also to practice revision of the annual accounts and to ensure the on time submission of the relevant document.

The reason behind the change is the fact that in every year 20 % of the annual accounts are submitted in delay and 20 % of the companies do not even submit the annual accounts.

Until now the revision of the annual accounts has been done by the registration department of the County courts (also called as the Commercial Register), who have the authority to issue fines on late submission, but the issuing of the fines has been inconsistent, and as another option the Commercial Register has the right to start liquidation proceedings in case the annual account has not been presented, this option is used as a last resource.

This has led to the point where there are thousands of companies registered, but who are not active anymore and they are just existing in the register, waiting to be deleted from the Commercial Register on the basis of not presenting the annual accounts, as liquidation proceedings if started by the company itself could be time consuming and costly.

Key points:

• Annual accounts need to be submitted 6 months after the end of the accounting year;
• Annual accounts can be submitted electronically or via notary public;
• Audit of annual accounts is compulsory in case of public limited companies (AS) and in some cases for private limited companies.

Audit of annual accounts:

In case of private limited companies (OÜ) audit obligation is compulsory in case:

• Two of the following conditions are met:

1. Profit exceeds 2 000 000 euro;
2. Assets 1 000 000 euro;
3. Average number of employees is 30.

• One of the following conditions is met:

1. Profit exceeds 6 000 000 euro;
2. Assets 3 000 000 euro;
3. Average number of employees is 90.

Review of annual accounts:

In case of private limited companies (OÜ) review obligation is compulsory in case:

• Two of the following conditions are met:

1. Profit exceeds 1 000 000 euro;
2. Assets 500 000 euro;
3. Average number of employees is 15.

• One of the following conditions is met:

1. Profit exceeds 3 000 000 euro;
2. Assets 1 500 000 euro;
3. Average number of employees is 45.

Fine for failing to submit annual accounts on due time

When Tax and Customs Board takes over the reviewing obligation of the annual accounts companies need to make sure that annual accounts are submitted on time or they risk receiving a fine. The amount of the fine will need to be regulated but at this moment failure to submit a tax return or other document by the due date is punishable by fine of 3200 EUR.

Kati Kruut

English speaking lawyer the Gencs Valters Law Firm in Tallinn, practising in fields of Corporate and Tax law in Estonia, Latvia and Lithuania.

T: +372 61 91 000

F: +372 61 91 007

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To find out more about tax requirements in Estonia, please contact our English speaking lawyers and tax consultants at info@gencs.eu