Annual Report for an Estonian Company

Within six months after the end of the financial year, each company registered in Estonia shall submit an annual report to the Commercial Register. The annual report shall be drawn up in Estonian and in the official currency of Estonia (Euro).

Annual reporting is mandatory for all companies registered in Estonia, even for companies that had no activities during the financial year. The annual report shall be submitted within six months after the end of the financial year of the company. Thus, if your financial year ends on December 31, you shall submit the report no later than June 30 of the next year.

All accounting procedures shall be completed before drawing up the annual report.

Mandatory components of the annual report include the management report on the activities of the company, the balance sheet, the profit and loss statement of the company, and the capital statement of the company.

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Filing annual reports: deadlines, fines and exclusion from the Business Register

With the latest extensive amendments to the Commercial Code and the new Commercial Register Act, the annual report deadline remains unchanged: it is still six months from the end of the fiscal year – that is, for most companies, June 30.

It should be borne in mind that the Commercial Register may, without warning, impose a fine on a legal entity for failing to submit a report on time, and that it may be imposed repeatedly, before fulfilling the obligation to submit a report.

When determining the amount of the fine for a failure to submit a timely report, the frequency of the violation, the term of the violation and other circumstances are taken into account. Fine can be assigned to the board, and if there is no board, and to shareholders or shareholders.

In addition, if the report is not submitted by the deadline, the Commercial Register may issue an automatic notice of the exclusion of the legal entity from the register, and three months after the deadline for submission of the report, the company may be removed from the register. The simplified procedure for exclusion from the registry also applies when the legal person fails to fulfil the obligation to appoint a contact person, if such a duty exists. In such a case, it is necessary that the legal entity has no unfinished judicial proceedings, enforcement proceedings and claims on the part of state authorities.

After three years from the date of exclusion from the Business Register, the legal entity can be restored by submitting the necessary documents and data (reports, decisions of the General Meeting, data on appointment of a contact person, etc.). Restoration is also possible for additional liquidation – if, for example, after the exclusion it is found that an undistributed property is assigned to a legal person.

If the general meeting of the legal entity has decided to terminate the activity, instead of the annual report it is necessary to submit the liquidation, compiled at the time of the decision on liquidation. The Act also provides for the possibility of extending the last economic year to 18 months. From the moment of the decision on liquidation begins a new business year, and if liquidation is not completed within 12 months, the legal entity is obliged to submit every year interim reports according to the accounting rules, and, upon completion of the liquidation, a final report. Failure to submit reports by a legal entity in liquidation shall be punished in the same way as in the case of an acting legal entity.

The Joint Stock Company may require the Registrar to remove himself from the Business Register if he or she has not started his or her business, and this is confirmed by all members of the Board and all shareholders. For other forms of business partnerships, the law does not provide for this possibility.

Various options for submitting an annual report to an Estonian company

The portal can submit an annual report by filling in certain forms or uploading the XBRL file to the server if the accounting software used by the company supports this function. In some cases, a PDF file can also be used during the transition period.

Completion of the annual report form

Commercial partnerships, non-profit associations and target institutions can fill in certain forms on the portal, who prepare an annual report in accordance with the accounting customs of the Republic of Estonia and whose reporting period begins on or after 1 January 2009. The entry person must select the main reports and can select additional reports, in accordance with the Accounting Act and the instructions of the Accounting Working Group (Raamatupidamise Toimkond). You should fill in all selected reporting forms in turn. The summation and verification functions assist in the compilation of the report. You can also fill out the board’s declaration and activity report. The cover sheet of the report has already been filled in advance. The portal will then compose the final report file, along with the table of contents and page numbers.

Uploading the XBRL file to the server

The advantage of uploading the XBRL file to the server is that it is created in the accounting software used by the company. Instead of manually entering data into the forms, you can upload it to the server in a ready-made form from your own computer. When uploading the XBRL file to the server, the selected forms will be filled out automatically. Once the records are uploaded to the server, corrections and additions can be made to all the forms thus completed, and a final report can be issued.

Who can report in PDF file

During the transition period, branches, IFRS users, users submitting consolidated reports, users submitting balance sheets, credit institutions, insurers, investment companies, fund managers, users can upload the report to the server in the PDF file, filing liquidation and closing reports and business partnerships, with the beginning of the period of the financial year until 01.01.2009. Their reporting forms may differ from the standard ones and therefore do not need to report on the portal. It is allowed to create a report outside the portal and upload it to the portal server in the PDF file.

How can I report through a notary

During a one-year transition period, the report can be submitted through a notary. The notary should provide the corresponding new forms and the signed report on paper or on electronic media. Then the notary will submit a report to the Commercial Register for the accountable person. For this action, a notarial fee is charged.

Financial year of the Estonian company

The financial period of an organisation covers an interval of 12 months. Normally, this period corresponds to the calendar year (1 January to 31 December), but an alternative financial year may be defined in accordance with the company’s articles of association. In the process of selecting the optimal financial period, it must be taken into account that the 12 consecutive months chosen must be synchronised with the operating cycle of the entity. It is also important to take into account that the financial year always starts on the first day of the month and ends on the last day of the month.

In cases of company foundation, liquidation or a change in the start date of the financial year, the length of this period may vary from less than 12 months to a maximum of 18 months.

The annual report preparation process includes the following key steps:

Formalisation of annual financial statements.
Development of a management report.

The procedure for submitting the annual report consists of the following steps:

Conducting an audit.
Preparation of proposals for distribution of profits or covering losses for the financial year.
Formal approval of the annual report.

Annual financial statements for Estonian company

According to the Accounting Act, companies are classified into various categories depending on the financial performance as at the reporting date and the degree of public interest. Based on these categorisations, Estonian financial reporting standards dictate various requirements for the preparation of annual reports.

If a company fails to meet the criteria of its category for two consecutive financial years, the requirements of the category to which it now belongs apply from the third year onwards. Annual reports should provide users with a clear and objective understanding of the organisation’s financial position, performance and cash flows, which is critical to making informed business decisions.

The annual accounts include the following elements:

A balance sheet showing a company’s assets, liabilities, and shareholders’ equity at the end of the fiscal year.
An income statement showing income and expenses for the reporting period.
A cash flow statement that analyses a company’s cash flows classified by operating, investing and financing activities.
A statement of changes in equity, emphasising any changes in equity during the reporting period.

The notes to the annual accounts should include an explanation of the financial reporting standard used, the accounting policies applied and an explanation of the key financial transactions for the year.

Micro and small enterprises have the option of preparing an abridged annual report containing at least two main reports – balance sheet and income statement – and accompanying annexes. If necessary, such enterprises can also prepare a full annual report.

Medium-sized and large enterprises are required to submit a full annual report, including a management report and all four main reports. This requirement also applies to non-profit associations and foundations.

Annual reports must be drawn up in Estonian and presented in the official currency of the country, to the nearest specified unit (euro).

Management report of the Estonian company

Management reports provide an in-depth analysis of the company’s activities, highlighting significant aspects that influence the assessment of the financial condition and economic performance of the company. They highlight key events for the financial year and project future development trends for the following year. It is also important to pay attention to both the core and supporting activities of the accounting entity.

If the company’s equity turns out to be negative at the end of the financial year, which does not comply with the requirements of the Commercial Code, the management report should contain an analysis of the measures taken or to be taken to ensure the company’s financial stability in the future or, if necessary, information on the adoption of alternative management decisions.

For companies subject to audit, the management report should include key financial indicators for the reporting year and the previous financial year, as well as present the methodologies for calculating these indicators. This not only ensures the transparency of the financial statements, but also facilitates a thorough understanding of the company’s financial position by its stakeholders.

Audit of the annual report of the Estonian company

The sworn auditor’s report is an integral part of the annual accounts for companies subject to mandatory audit conditions under the Auditing Act. The audit of the annual accounts is required for accounting entities that exceed the prescribed thresholds for at least two of the following criteria:

Annual net sales of at least €4 million;
The balance sheet reaches or exceeds €2 million;
The average number of employees during the year is 50 or more.

Additionally, an audit is required for organisations that, as at the reporting date, meet at least one of the following conditions:

Annual net sales exceed 12 million euros;
The balance sheet volume is more than €6 million;
The average number of employees equals or exceeds 180.

In addition, auditing is mandatory for all public joint stock companies, state and municipal enterprises, as well as for non-profit organisations, foundations and political parties financed from state or local budgets. This ensures a high level of transparency and accountability in the financial activities of these entities.

Basic principles for preparing the annual report in Estonia

A company’s annual report is prepared to provide a clear and complete picture of its financial position, performance and cash flows. Important principles and requirements for preparing the report include the following aspects:

Separate accounting: The Company maintains independent records of its assets, liabilities and business transactions, as well as the assets and liabilities of its owners, creditors, employees and customers. This ensures transparency and clarity of financial reporting.
Going concern: The preparation of the report is based on the assumption that the company will continue in business for the foreseeable future and does not plan to cease operations.
Clarity and specificity: Information in the report should be presented in a concise and clear manner to eliminate the possibility of ambiguous interpretations.
Completeness of information: The report should contain all material information affecting the company’s financial position and performance. The absence of important data may distort the economic decisions of the report’s users.
Consistency of accounting policies: Stable accounting policies and formats are used in the preparation of the report, which facilitates comparability of reporting data.
Matching expenses and income: Expenses related to the receipt of income for the reporting period should be recognised together with that income.
Objectivity and credibility: The information provided should be objective and credible, based on real data and events.
Prudence: The report should be prepared in accordance with the principle of prudence, avoiding overstatement of assets or income and understatement of liabilities or expenses.
Availability of information: The report should provide up-to-date and accurate data that allows users to get a realistic view of the state of the company.
Substantive accounting: Business transactions are accounted for according to their economic substance, not just their legal form.

The content and detail of the annual report depends on the type and size of the company, which determines the requirements for the scope and depth of disclosures.

Filing an annual report in Estonia

The annual report must be submitted to the Estonian Commercial Register within six months after the end of the financial year. The submission of the report is done via the e-commercial register portal, which allows the procedure to be performed electronically.

When you file your annual report, the system automatically displays all authorisations and notifications registered in your profile. It is important to confirm that all notifications required by law have been made, or to confirm that there are no such obligations. It is recommended that you carry out a thorough check of your details with the Register of Economic Activities before confirming the information in the report. This will ensure that the information provided to the register is accurate and up to date. If any inaccuracies are found in the register data, an amendment notice should be submitted immediately.

Thus, following these procedures not only strengthens the legal clarity of your company’s operations, but also helps to maintain an up-to-date status in government registries, which is critical for transparency and trust from regulators, partners and customers.

FREQUENTLY ASKED QUESTIONS

The annual report in Estonian is a mandatory document required by Estonian law. The transparency of the business environment in the country ensures that the reports of all companies are available to the public through the electronic commercial register. This availability of information plays a key role in maintaining a level playing field for all market participants.

The annual report carries important information for customers, partners and suppliers, who use this data to assess the financial stability and reliability of the company. Thus, the availability of complete and accurate information in reports can significantly influence the conditions and opportunities for expanding co-operation.

In addition, annual reports provide valuable insights into the current state of the industry, allowing companies to analyse competitors’ activities and adapt their development strategies to overall market trends. Such analyses can help strengthen a company’s market position, competitiveness and reputation.

In this context, the annual report becomes not only a legal requirement but also a strategic tool that strengthens transparency, trust and accountability to all stakeholders.

Compliance with the deadline for filing the annual report in Estonia is an extremely important moment in management practice. The financial year ends on 31 December, which means that companies have until 30 June to prepare and file their accounts.

The annual report is a comprehensive document that requires careful work and a thorough understanding of the company’s financial position. It includes not only basic financial indicators, but also more detailed analytical sections such as the income statement, balance sheet, cash flow statement and explanations of significant changes from the previous period.

It is recommended to start preparing for the annual report well in advance to avoid errors and ensure that the information provided is complete and accurate. Postponing preparation until the last minute can lead to haste, omissions in detail and, as a result, potential legal and financial risks.

It is also important to pay attention to the need to comply with all regulatory requirements, especially if the company is subject to mandatory audit. In such a case, the audit must also be completed in time for inclusion in the annual report.

In addition to legal necessity, timely filing of the annual report maintains a positive business reputation and trust among partners and clients, which is an important asset for any company.

Submitting an annual report well in advance does open up a number of important benefits for the company:

Quicker dividends: Once the annual report is approved at a shareholders’ meeting, the company can start paying dividends more quickly. This can be particularly important for shareholders expecting a return on investment.
Avoiding penalties: Timely filing of reports ensures that there are no fines and penalties for late submission, which directly affects the financial condition of the company.
Dealing with negative capital: If a company is facing a negative capital problem, early filing of a report allows for more immediate action to be taken to stabilise the financial position. This may include seeking additional investment, debt restructuring or other measures to restore financial stability.
Maintaining a reputation: A company that reports its financial statements on a regular and timely basis builds a reputation as a reliable and transparent business. This is especially important when applying for loans or attracting new investments, as lenders and investors prefer to work with companies that demonstrate financial discipline and transparency.

Thus, disciplined and responsible filing of annual accounts not only helps to avoid legal and financial risks, but also helps to lay the foundation for long-term success and business development.

The annual report is a key tool for analysing the financial condition of a company. It not only provides an accurate picture of current assets, liabilities and income, but also reveals the real profitability of the company, which may differ significantly from the simple amount of funds in bank accounts.

The erroneous equality of bank balance sheet and profit is a really common mistake. The availability of money in the accounts does not always reflect the real financial stability of the company, because it does not take into account current liabilities, debts and other financial obligations. The annual report provides a more comprehensive analysis, including asset depreciation, accounts payable and other factors that affect net assets and the financial result.

If during the preparation of the annual report it is discovered that the company’s capital is negative, this signals possible financial difficulties. Early detection of such a problem allows taking timely measures to eliminate it. Such measures may include debt restructuring, search for additional sources of financing, cost optimisation and other financial manipulations aimed at improving the financial condition of the company.

Our company, with significant experience in managing finances and dealing with negative equity, can offer effective solutions. Early filing of the annual report not only helps to avoid penalties for late filing, but also gives more time to adequately respond to identified problems, which is critical to maintaining the health of the business and its long-term development.

Estonia does have a requirement to file annual reports for all legal entities within six months after the end of the financial year. This requirement emphasises the country’s commitment to transparency and openness in doing business. The annual report contains important information about the financial results, assets and liabilities of the company, and the business activities of the previous year.

The importance of the annual report:

Transparency: Annual reports are made publicly available through registers such as the electronic commercial register, allowing investors, creditors and other stakeholders to easily obtain information on the financial health of the company.
Accountability: Filing reports confirms a company’s compliance with legal and financial regulations, contributing to a responsible business community.
Measuring progress: The annual report provides valuable data on the growth and development of the company, which is important both for internal analyses and for attracting new investments.

Access to annual reports: Anyone interested can access these reports through electronic business information management platforms, which builds public confidence and improves the investment climate in the country.

Thus, timely filing of annual reports is not only a legal obligation, but also plays a key role in maintaining a high level of corporate discipline and market confidence.

Indeed, in Estonia, all legal entities, including those that have not conducted any business activities during the financial year, are required to file annual reports. This requirement reflects the country’s commitment to maintaining transparency and up-to-date data on all registered companies, regardless of their level of activity.

Key aspects for companies without business operations:

Reporting: Even if the company has not had any transactions, it must file an annual report, which is likely to contain nil values for many items. However, this confirms that there was no activity during the reporting period.
Obligations: This requirement applies to all companies registered as legal entities, regardless of whether they have produced any commercial activity or remained passive.
No inactive status: There is no legal status of “inactive company” in Estonia, so even inactive companies must comply with all standard reporting procedures.

Consequences of not filing reports: Failure to comply with the requirement to file annual reports may result in administrative fines and other legal consequences that may affect the company’s status in the commercial register and its reputation. Therefore, it is important to keep financial records up to date even if there is no active business activity.

Such measures emphasise the importance of adhering to the rules and regulations of financial discipline, which contributes to a healthy and transparent business environment in the country.

Indeed, filing an annual report through the electronic commercial register in Estonia is a convenient and efficient process. Here are the steps you need to follow to successfully file your annual report:

Review the accounts: Ensure that all necessary accounting records for the year are complete and correct. This includes checking all financial transactions, assets and liabilities of the company. If you are unsure of the accuracy or completeness of your records, it is advisable to seek the assistance of professional accountants or auditors.
Preparation of the annual report: The next step is to prepare the annual report itself, which should include all the required financial documents such as the balance sheet, income statement, cash flow statement and notes. It is important that all the data is presented clearly and is in line with the actual financial position of the company.
Report Filing: Go to the e-Commercial Register portal and follow the instructions to file a report. This usually involves uploading prepared documents and confirming relevant company information.
Reporting language: Please note that the documents must be submitted in Estonian. If your original records are in another language, they may need to be translated.
Submission Confirmation: Once you have uploaded your documents, ensure that you receive confirmation that your report has been accepted by the registry. This ensures that your report has been successfully filed and registered.

Following these steps will help ensure that your company complies with the requirements of Estonian law and maintains transparency of its financial activities to the state and other stakeholders.

Yes, filing an annual report in Estonia through the electronic portal of the commercial register is a convenient and efficient way to fulfil legal requirements. Electronic systems ensure speed, accuracy and ease of access, which greatly simplifies the filing process for companies.

Here are the basic steps for filing an annual report through the e-Commercial Registry portal:

Document Preparation: Before filing, make sure that all financial statements are ready and reflect the actual financial condition of the company. This includes the balance sheet, income statement, cash flow statement and other required attachments.
Login: Log in to the electronic commercial register portal using your credentials. This can be done through electronic identification or other means of authorisation provided by the state.
Uploading documents: Upload your prepared documents to the appropriate sections of the portal. File formats and document requirements are usually clearly indicated on the portal.
Verification and Validation: Check all uploaded data for accuracy and completeness. After verification, confirm the report submission.
Receive confirmation: After submitting the report, ensure that you receive an email confirmation of its acceptance. This will serve as confirmation that the report was successfully submitted and logged.

Filing the annual report electronically not only reduces paperwork, but also speeds up the data processing process, making it more transparent and accessible to all market participants. It also simplifies access to information for stakeholders and improves the country’s overall business environment.

Compliance with the deadline for filing the annual report is an important legal obligation for all companies registered in Estonia. Failure to comply with these requirements may lead to serious consequences:

Warning from the Commercial Registry: If an annual report is not filed by the deadline, the Commercial Registry will send a warning to the company with a new deadline for filing. This gives the company another chance to rectify the situation without further sanctions.
Penalties: If, even after a warning, a company fails to comply with the reporting requirements, fines may be imposed. The amount of fines may vary depending on the circumstances, such as the length of the delay and the size of the company.
Public access to reports: Each company’s annual report is made publicly available on the Register of Enterprises, which ensures transparency and allows stakeholders such as creditors, investors and customers to assess the financial health of the company. This emphasises the importance of timely submission of complete and accurate information.

Compliance with the regulatory requirements for filing an annual report not only avoids potential fines, but also maintains the integrity of the company’s reputation. Companies are advised to closely monitor compliance with all regulatory requirements and respond promptly to all requests and warnings from government authorities.

Yes, in Estonia the annual report filing process is organised in such a way that company board members can file reports themselves or delegate this authority to accountants. This adds flexibility to the management of corporate reporting and allows for more efficient use of company resources.

Here’s how you can organise this process:

Report filing by board members: Board members can personally handle the filing of annual reports via the electronic commercial register. To do so, they need to have the appropriate electronic means of authentication, such as ID cards or mobile IDs, to enable them to securely log in and file the required documents.
Delegation of authority to accountants: A board member can also authorise the company’s accountants to enter, manage and file the annual report on behalf of the company. This is done by formally granting access to relevant systems and authorisations under the electronic commercial register. The accountants, once authorised in this way, can perform all the necessary actions to prepare and file the accounts, ensuring accuracy and timeliness of financial discipline.
Importance of Verification: Whether it is the board members or the accountants who prepare and file the report, it is important to thoroughly review all information submitted for accuracy and completeness before final filing.

These mechanisms not only simplify the reporting process, but also help to ensure that all company financial data is handled in a professional and responsible manner, which is critical to maintaining the credibility and legitimacy of a company’s operations.

Here are detailed instructions to help you and your accountant organise this process effectively:

Logging in:

- Go to the official portal of the Estonian Electronic Commercial Register: www.rik.ee.
- Log in using your e-resident card or other state-provided means of electronic identification.

Assignment of an accountant for data entry:

- Once logged in, select the “Annual Reports” section and then the “Identify Data Entry Persons” subsection.
- Click on the “Add a new person for data entry” button.
- Enter the personal code of the person to whom you want to grant access to data entry. This code is unique for each Estonian resident or e-resident.
- Select your company from the list to specify which organisation this person will be entering data for.

Set permissions to send the report:

- Check the “The person entering the data is authorised to send the report” option to give the accountant the authority to not only enter but also file the annual report on behalf of your company.
- Click on the “Save” button to confirm and complete the access configuration process.

After completing these steps, your accountant will be authorised to submit the annual report via the electronic commercial register. This will allow you to manage your company’s financial statements more efficiently and conveniently, simplifying the regulatory compliance process in Estonia.

In order to grant your accountant access to the filing of the annual report in Estonia, an official letter must be sent to the Estonian Centre of Registers and Information Systems (RIK). In this document, you should state the reasons why you cannot delegate access yourself and express your wish to allow your accountant to do so. It is important to include information about the accountant in the letter, such as name and identification code, and to state that the accountant will be authorised to enter data for the annual report. The letter should be manually signed by a board member.

Once the RIK application has been approved, your accountant will be given the opportunity to enter the annual report. The report will then need to be manually signed by you. Once the signing is complete, the report should be scanned or photographed and sent back to your accountant for official filing.

It is also recommended that you contact the Estonian e-residency service to apply for or extend your residence permit, which will make it easier to do business in the future.

The annual report for all companies necessarily includes the following elements:

Balance sheet – reflects the financial condition of the company as of a certain date.
Profit and Loss Statement – shows the company’s financial results for the reporting period.
Notes to the Annual Report – provides expanded information and explanations of the financial statements.

Organisations that are not categorised as micro-enterprises are also required to include a management report. This document analyses key aspects of the company’s performance, including key developments for the financial year and future prospects. The management report must be prepared by a member of the board, but our team is available to support you in this process.

For large companies, additional reports are mandatory:

Statement of Cash Flows – analyses changes in financial position related to cash flows.
Statement of Changes in Equity – reflects changes in the company’s capital structure.

In some cases, an auditor’s assessment of the annual report is required, which is mandatory to confirm its reliability.

It is important to bear in mind that management reports are available for public viewing, so care should be taken in the disclosure of information in these documents to ensure compliance with both corporate policy and applicable legal requirements.

Annually, no later than 6 months after the end of the financial year (often – the calendar year, from 1 January to 31 December), an annual report should be prepared and submitted to the Commercial Register containing a comprehensive overview of the company’s performance for the previous financial year.

Yes, even if there was no business activity.

The information that must be provided in the annual report depends directly on the size of the company.

Micro-enterprise
According to the Accounting Law, micro- and small-scale enterprises can prepare an abridged annual report, which consists of at least two main reports – a balance sheet and a profit statement, as well as up to 3 annexes. The micro-enterprise can (optionally) prepare an abridged or full annual report. Therefore, a micro-enterprise that uses the abridged annual report option is not required to prepare a management report.
Small-scale business
The abridged annual report of a small-scale company is drawn up in accordance with the Estonian financial reporting standard and consists of two main reports: a detailed balance sheet and an income statement, as well as up to 9 annexes. The small business also undertakes to prepare a management report.
Medium-sized and large enterprise
The annual report is drawn up either in accordance with the requirements of the Estonian financial reporting standard, or in accordance with the requirements of the International Financial Reporting Standards (IFRS): a management report, 4 main reports, and an average of 15 annexes. A full annual report is required for medium-sized and large companies as well as non-profit associations and foundations.

Our company accepts documents for processing in many languages (the accounting department considers each case on an individual basis). A Member of the Board of an Estonian company must be prepared that an Accountant preparing an annual report can ask for clarification of the content of the submitted documents. Financial statements are prepared in Estonian (in the official currency of Estonia – the euro, indicating the degree of accuracy used in figures).

Purchase and sales invoices must include the following information:

Title
Account number
Date of issue
Description of purchased goods or services
Amounts (quantity, unit price, total amount)
Names of supplier and customer
Addresses of supplier and customer
Supplier company registration number
VAT number of the company

Bank statements are allowed in PDF and XML formats.

After concluding an agreement on the provision of accounting services, all the source documents of your company must be sent to the provided email address of your assigned Accountant.

Our Accountants use the following software: SimpleBooks, e-arveldaja, and 1C Company.