[vc_row][vc_column][vc_column_text]The termination of a company’s activity is as natural a stage in the development of any business as its beginning. At the same time, it is often very difficult to liquidate an enterprise due to the large number of legal and business relations, obligations, and often debts that are part of the company’s business activity.
Depending on economic circumstances, the company owner, who has decided to end the business, must make a choice between liquidation or bankruptcy.
If it is a question of voluntary termination (the law also establishes cases when the company is terminated forcibly), the issue is resolved at the general meeting of shareholders, and in case of a positive decision, the liquidation process begins. This lengthy and time-consuming procedure of debt collection, sale of property and satisfaction of creditors’ claims involves many issues of both a legal and economic nature. As a result of the liquidation, the assets remaining after the satisfaction of the creditors’ claims will be distributed among the shareholders, after which the company is deregistered from the Commercial Register.
The process is somewhat different in the case of bankruptcy. The main difference here is the fact that the company is unable to satisfy the claims of creditors, and that this inability is not temporary, taking into account the economic situation. If such a situation occurs, the members of the management board of the company must immediately file to the court an application for declaring bankruptcy. It should be stressed that the filing of an application for bankruptcy in this case is the responsibility of the members of the board and, in the event of non-compliance, members of the management board may incur both civil and criminal liability.
Not only the debtor but also the creditor may file an application to the court to declare a company bankrupt, however, it should be remembered that the main condition here the debtor’s insolvency.
In any case, the processes described above are quite complex from both a legal and an economic point of view, and it is extremely difficult to navigate in them without in-depth knowledge. A good way in building this knowledge is to start with simple consultation. The further participation of our specialists will be determined solely by your needs.
If the Estonian company is put into liquidation, the company’s creditors (clients) can file their claims through the appointed liquidator within four months. If the assets of the company are insufficient to fulfil all its obligations, the liquidator is required to file to the court an application to declare the company bankrupt.
The court will most likely declare the company bankrupt and appoint an interim bankruptcy trustee, The court proceedings will begin. If the company does not have any assets that can be sold in the process of bankruptcy, and none of the company’s creditors deposits with the court funds to cover the future work of the bankruptcy trustee, the bankruptcy process will end on the basis of the deregistration of the company. After that, it is no longer possible to submit a claim against the company’s former management board member.[/vc_column_text][vc_column_text]
Bankruptcy procedure description
In the current economic situation, issues related to insolvency proceedings – restructuring, bankruptcy, debt adjustment – have become particularly relevant.
Competition law and bankruptcy and liquidation procedures are one of the most important activities of our company. By combining both legal and economic experience and thinking, we can be doubly useful and effective in addressing possible problems.
Bankruptcy is not necessarily a dead end for the debtor or creditor, but it can also be a solution – not a good solution, but still a solution. Bankrupt nests often have resources that, when handled skilfully, can satisfy creditors’ claims, and although this is not common in practice, it is also possible to rehabilitate the debtor company by judiciously using the resource found in it.
Our lawyers have many years of experience in representing the interests of both creditors and debtors in bankruptcy proceedings. In addition, we advise clients at all stages of restructuring, debt adjustment and liquidation procedures.
If the above is not entirely related to your problem, feel free to contact us. Only by accurately describing our problem can we decide how we can best help you.
We can support you with the following questions:
Legal analysis of pre-bankruptcy transactions;
Initiation of bankruptcy proceedings, including filing for bankruptcy and filing for bankruptcy;
Advising debtors on finding optimal solutions in a pre-bankrupt situation;
Representation in court during the consideration of the bankruptcy application, by way of submission and admission of claims, at general meetings of creditors, etc.;
Preparation of applications, claims, complaints, and other documents necessary for bankruptcy proceedings;
Advice on restructuring procedures;
Consulting and representation in liquidation procedures;
Representation in transactions with insolvency practitioners, creditors, or the debtor;
Representation of insolvency practitioners in more complex proceedings.
[vc_row][vc_column][vc_column_text]The provisions of the current Estonian Commercial Code governing the Business Register will be included in a separate Law on the Business Register and the existing Commercial Code will be substantially amended.
The Law on the Commercial Register will enter into force in three stages: the general period of entry into force is February 1, 2023, changes in the maintenance of the list of shareholders and the list of members of the construction company will come into force on September 1, 2023, and only from March 1, 2024. The changes associated with the reservation of the brand name and the entry on a certain date, only from March 1, 2024.
These changes in Estonian legislation primarily provide legal clarity and ensure the reliability of the data submitted to the Estonian electronic business register. The main objective is to simplify the activities of both the entrepreneur and the registrar, including to provide legal certainty for third parties by relying on the data of the registry. I
The new provision allows the registrar to fine the person obliged to provide data on the beneficiaries in case of failure to provide the data required by the legislation or to provide knowingly false information. In this way, the data published about companies in the commercial register become more reliable and allow third parties to analyze the history and business competence of the legal entity before starting a business relationship. Third parties will also have access to information about fines imposed on individuals associated with Estonian legal entities, which makes the Estonian business environment even more open.
Minimum capital requirement for companies to be abolished
When establishing a company in Estonia without paying the authorized capital, the current Economic Code does not set a term for making a contribution to the authorized capital, but leaves it to the discretion of the shareholders, which leads to a situation where the authorized capital is not contributed. The authorized capital must be paid if the shareholders wish to increase, reduce or pay dividends. The regulation of private companies is becoming more flexible as the requirement of a minimum authorized capital is eliminated. This means that the limited liability partnership can no longer be created without the contribution of the authorized capital, but the amount of the authorized capital is left to the discretion of the founders, because the minimum authorized capital requirement (EUR 2,500) established by law is generally not related to the actual capital requirements of the company.
Thus, a limited liability partnership may be established with a minimum authorized capital (1 euro).
Maintenance of the list of shareholders of a private limited liability company in the commercial register
From 1 September 2023, the list of shareholders of the limited liability partnership will be kept in the commercial register, which means that the data on the list of shareholders will be registered in the commercial register. This is accompanied by public reliability of data, which greatly increases legal certainty in transactions with shares of a private company. According to the current regulation, the shareholder must submit the contract confirming the acquisition of the share to a notary to confirm the share in the limited liability company and transfer the share. But in the future both the transmitter and the acquiring part can rely on publicly available and reliable data from the business register.
The amendment applies to companies whose shares are not registered in the securities register or which have not renounced the formal requirement for the disposition transaction. If the shares are registered in the securities register, the list of shareholders is still kept in the register, and if the formal requirement of the alienation transaction has been abolished, the list of shareholders is kept by the board of a private company.
Failure to submit the annual report of the Estonian Company
At the moment, a significant problem is the deadline for submitting the annual report of legal entities, because the submission of the report is delayed or the annual report is not submitted at all. The legislator took the position that a systematic failure to submit an annual report is unacceptable, as it is a matter of business security.
The new provision of the Act allows for the imposition of a fine on a legal entity that has not submitted an annual report within the prescribed time limit, without a warning. When imposing a fine, the registrar is given a great deal of discretion, so a fine may be imposed repeatedly until the annual report of the Estonian company is submitted. Among other things, when making a decision, it may be taken into account how many times the legal entity has not submitted an annual report in time, How much time has elapsed since the deadline for the submission of the report and other circumstances important to the registrar for the imposition of the fine and its determination. In addition to the legal person, the registrar may also impose a fine on a member of the board of a limited liability partnership and, as an innovation, in the case of private companies, if they do not have a board, also on shareholders.
If the legal entity does not submit the report within the deadline set by the registrar and at least three months have passed since the statutory deadline for the submission of the annual report, the legal entity may simply be removed from the register under certain conditions (no assets, not party to any ongoing proceedings).
In order to reduce the abuse associated with the breach of the reporting obligation and to avoid situations where it is desirable to get rid of associations that have not submitted an annual report and do not want to comply with this obligation, the law has been amended, which states that the registrar shall not record in the commercial register a merger, division or transformation until the legal person involved in the merger, division or transformation has submitted the missing financial year report.
Possibility of entering an entry in the commercial register at a certain date
From 1 January 2024, companies will be able to reserve one brand name for up to six months. When reserving the brand name, it is necessary to specify the scope of the company for which the brand name will be used, as well as the organizational and legal form of the company, which cannot be changed in the future when reserving.
In addition, in justified cases, registration in the business register may be requested on a specific date. This can be done, for example, if it is necessary for the merger to take effect on a certain date and with sufficient time it becomes clear whether there are defects in the application or whether the entry can be made on the desired date.
An application to make an entry on a certain date can only be submitted for a change of data, but not for the first application to establish an Estonian company. The state fee for the reservation of the brand name is 150 euros and is not refundable in case of cancellation of the reservation of the brand name.
Reinstatement of a person from the Estonian Register
Under the changes in force, the registrar may remove a legal person from the registry in a simplified and faster manner than before, for example, in the case of failure to submit an annual report or absence of a contact person. For example, if an annual report is not submitted, a legal entity may be removed from the register no earlier than three months after the deadline for filing the report. A legal person may also be removed from the register if it has not specified a mandatory contact person. The company is now obliged to appoint a contact person for a certain period of time. At the end of the term it can be extended or the contact will be automatically removed from the register.
A legal person may be reinstated in the registry on the basis of a declaration, both for the purpose of continuing the activity and for the conduct of liquidation proceedings, if it turns out that the expelled person has retained property. Reinstatement in the roster is possible within three years after removal from the roster, if the person has been excluded due to the failure to submit an annual report or the absence of a contact person (forced exclusion). In other cases, if the compulsorily liquidated company had assets and it was desirable to terminate activities related to assets, the company could be reinstated in the registry to cease operations. This is called additional liquidation and in this case there is no time to reinstate such a company.
In the case of the reinstatement of a legal entity in the registry, the expiry of the claims against it ceases from the moment of its exclusion from the register until the moment of its reinstatement in the registry.
Other important changes
The amendment removes from the law the requirement that the net assets (equity) of a limited liability partnership must not be lower than the minimum authorized capital of a limited liability company provided by law.
Temporary (two-month) prescription of distribution of property of the liquidated joint-stock company is excluded if the joint-stock company has only one shareholder or, in addition to the shareholder, the shareholder is the joint-stock company itself.
The foreign subsidiary is no longer obliged to appoint a contact person, it becomes a voluntary procedure. A branch of a foreign company is obliged to enter in the register the Estonian address of the branch, since the requirement for the appointment of a contact person, which was still in force, is cancelled if the head of the branch was in a foreign country.
When creating group rules clarify the responsibility of members of the board and specify in which cases the board of the subsidiary is not responsible for damage caused by the execution of orders of the parent company.
The requirement that at least one liquidator must have a residence in Estonia has been abolished and the requirement does not apply to board members, who are often liquidators.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][us_btn label=”Contact us” link=”url:https%3A%2F%2Fwww.estonia-company.ee%2Fcontacts%2F” align=”center”][/vc_column][/vc_row][vc_row][vc_column][us_page_block id=”10363″][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]LKS Consult OÜ offers its customers the use of professional accounting software adapted for non-resident Estonian companies, allowing the secure exchange of information about the company’s activities with the accountant and the Estonian Tax and Customs Board.
Our team is constantly working on making accounting for our customers as simple and convenient as possible.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_column_text]Today, we are pleased to offer you the use of our accounting program, which will allow you to:
Invoice to your customers in a format that complies with Estonian law
Save information about the company’s activities during the reporting period
Have a digital archive of all company documents
View the current status of the company’s accounts
Be confident in the security and confidentiality of the information provided
The use of this accounting program for LKS Consult OÜ clients is completely free of charge.
Program description
LKS Consult accounting software is a convenient accounting program capable of bringing the automation of financial accounting to a qualitatively new level. A convenient online product and the services available in it will allow you to effectively solve the problems of any business.
LKS Consult OÜ continuously improves the program and services to offer a modern and versatile accounting solution that meets the needs and objectives of our clients. This accounting program is designed to automate all accounting and tax records in accordance with the current Estonian legislation.
The main advantages of LKS Consult accounting software are the possibility of keeping sales accounts that meet the requirements of Estonian legislation, organization of analytical, currency, quantitative accounting of the company, simple and convenient functionality, 24/7 availability from anywhere in the world.
Program opportunities
Sales invoice accounting
Convenient and easy to generate sales accounts to provide to your customers. The company’s new customers are automatically saved to the customer base. All accounts are also converted to PDF. A quick and convenient overview of the status of compiled accounts in the list of sales accounts.
Main advantages:
Simple and fast compilation of sales accounts
Convenient overview of compiled sales accounts
Adjustment of the content and presentation of accounts
Support of different currencies for all types of transactions
Export of accounts in PDF format
Purchase invoice accounting
The loading of purchase accounts is as simple as the creation of sales accounts. Your company’s accountant will be able to charge each purchase account to different groups of expenses. The list of purchase accounts gives a quick and clear picture of the status of your Estonian company’s accounts.
Main advantages:
Convenient overview of the status of purchase accounts
Copies of invoices and cheques are saved on the server
Support of different currencies for all types of transactions
Export of accounts in PDF format
Bank statement
In the section Banking services, you can access all bank statements of your Estonian company by month and filter them by date or bank. With the help of LKS COnsult accounting software, you will be able to have an archive of bank statements for the entire period of the company’s activity and have access to them 24/7 from anywhere in the world.
Personal account
This section is created for convenience of clients and monitoring of financial indicators of the company. In the Account section, you can also see all the invoices issued by LKS Consult OÜ to your company, as well as their status.
LKS Consult accounting software is a convenient platform for automated accounting for Estonian companies with all necessary functionalities. Our product is constantly improving, and we come up with new and new approaches to solving accounting problems, taking into account the needs of our customers.
[vc_row][vc_column][vc_column_text]Until July 1, 2021 rules for declaring and fulfilling turnover tax obligations under the special MOSS (MiniOneStopShop) procedure were in effect for enterprises providing e-commerce and telecommunications services.
This meant that when providing digital services between different countries, it was possible to follow the rules of the country where the company is registered.
Digital services include any services provided electronically, for example:
Telecommunication services
Broadcasting services
Website development and hosting
Software development and update
Distance learning
Creation of images, texts and data, the possibility of using digital databases
Creation of music, movies and games, including online gambling
It should be noted that the following services are not digital:
Radio and television broadcasting services
Printed materials, such as books, newsletters, newspapers and magazines
Professional services, such as lawyers and financial advisors advising clients online
Training services in which course materials are provided by the teacher via the Internet
Offline data storage services
Advertising services (for example, in newspapers, on posters or on television)
Phone helpline/assistance
From July 1, 2021, the MOSS system can be used not only in the case of electronic services, but also in the case of all other services:
Which an Estonian company (liable for turnover tax) will provide to persons who are not registered liable for turnover tax from other EU countries
The place of origin of turnover, which is the country of the recipient of the service
All the marginal rates applicable in the member States of the Community for remote sales have been cancelled and, at the moment, a single marginal rate of 10,000 euros is applied.
Since the special procedure for taxation of turnover has expanded, its name has also changed. The new extended special order is now called OSS (OSS special order, English OneStopShop).
To ensure unhindered delivery of goods from third countries to the recipient or customer of the goods to simplify declaration and payment A special procedure has been introduced for the turnover tax on the import of such goods (IOSS, English Import OneStopShop).
Remote Sale and special OSS procedure
Based on the Turnover Tax Law, remote sale is the alienation of goods by an enterprise of one EU state to another EU state to an unregistered person liable for turnover tax.
The application of a special OSS procedure is voluntary for enterprises
It is important to remember that the new procedure can only be applied if the following conditions and requirements are met:
The seller of the goods or service provider has a location or permanent place of business in only one EU state.
The product is sold, or the service is provided to a person who has a place of residence or residence in another EU state, which is not registered as a turnover tax obligator or a person with a limited turnover tax obligation in any EU state.
The total turnover of remote sales within the Community and electronic communication services, as well as services provided electronically, does not exceed 10,000 euros per calendar year.
If the company still does not want to apply a special procedure, then still may be registered as a turnover tax obligated person in each EU State where a turnover tax obligation arises from the sale of goods or services to the final consumer.
Import of goods and special IOSS procedure
A special IOSS procedure was introduced primarily for the convenience of the end user. If the entrepreneur uses a special procedure, the recipient of the goods does not have to submit a customs declaration for goods ordered from third countries himself. The seller collects turnover tax when paying for the order and declares it monthly in the IOSS declaration.
Special order IOSS simplifies the fulfilment of tax obligations for entrepreneur: entrepreneur, joined special order can register the user to special order one state and to declare and pay the VAT when importing goods, covered by special order only in that state (the state in which was registered by the user) instead of paying tax turnover of import of goods in each country where the product imported.
Similar to the OSS special order, the application of the IOSS special order it is voluntary for enterprises.
In order to join the OSS/IOSS special procedure, an entrepreneur must submit an application to the Estonian Tax and Customs Department. After submitting the application, the company is issued a registration number, which is used only for the application of a special OSS/IOSS procedure.
When submitting an application, the taxpayer must take into account that the special IOSS procedure can only be used for remote sale goods imported from non-European Union states, the cost of which does not exceed 150 euros per order, and which are not excise goods.
Additionally, it should be taken into account: in order to consider the sale of imported goods as a remote sale, the goods must be physically delivered from outside the European Union directly to the final buyer.
If goods delivered from outside the European Union are sent to a customs warehouse in a member State of the European Union, from where they are subsequently delivered to a customer who is not registered as liable for turnover tax, then such transactions are not subject to declaration on the basis of a special IOSS procedure, since at the time of sending the goods to the customer were already in the territory of the European Union.
Execution of tax obligations
The obligation to submit the OSS declaration is quarterly, and the IOSS declaration is monthly. Declarations must be submitted by the end of the month following the tax period. The use of a special procedure is not an obligation, but an opportunity to make it easier to declare your turnover tax.
MOSS special order companies registered in Estonia that If they wish to apply the Extended Special Procedure (OSS) in the future, they should not submit a new application.
If the company no longer carries out remote sales inside the European Union or does not provide services covered by a special procedure, it may terminate the OSS/IOSS special procedure by notifying no later than the tenth day of the month following the month of change.
Cryptocurrency activities for Estonian companies are exempt from value added tax, which allows the company not to become a VAT-obligated entity, but there are still cases that do not fall under this exception.
Exchange of cryptocurrencies to traditional currencies (fiat) or other cryptocurrencies
The exchange of cryptocurrencies, as well as the exchange to fiat, is exempt from value added tax in accordance with § 16 (21) 4) of the Turnover Tax Law.
However, not all services related to cryptocurrency are considered as an exchange service, and it is important to correctly determine whether the company is engaged in providing cryptocurrency exchange services or sells a service by using a third-party platform.
In the first case, the company has no obligation to register as taxable, since the company’s turnover is exempt from value added tax and the crypto-exchange company is not required to have a tax number.
Service for providing access to the platform
The service that provides access to the exchange platform is considered as an electronic service and is subject to value added tax in accordance with the Estonian Turnover Tax Law.
Thus, a company that provides a service for using a cryptocurrency exchange platform is not exempt from paying value added tax and must be registered as taxable and declare its monthly turnover – in a turnover tax return in a form of KMD.
Cryptocurrency Wallet Service
The cryptocurrency wallet service (storage only) is a software that allows you to store other user’s private keys. In this case, the wallet service is of a technological nature and represents technological assistance, which is an electronic service. According to the decision of the European Commission, the wallet service does not fall under the tax deduction, and wallet services provided for remuneration are subject to value added tax, and it is necessary to obtain a VAT number.
Wallet services can also be considered as financial services, if the wallet allows users to both store and make transactions with cryptocurrency. In this case, the wallet service will be subject to value added tax as a financial service in accordance with the Turnover Tax Law. Accordingly, the company that provides wallet services must become taxable and declare its monthly turnover in the Tax and Customs Department in the KMD declaration form.
Mining
According to the decision of the European Commission, the extraction of virtual currency as a service to another person falls under the exception provided for in Article 135 (1) (d) of the Directive of the Law on Turnover Tax, which means that mining is not subject to value added tax and is a non-taxable turnover of the company.
In this situation, it is important to point-out that if we are talking about non-taxable turnover, then value-added tax is not deductible for the purchased mining goods, such as the purchase of equipment, payment for electricity consumed and other costs associated with mining.
Due to the fact that mining has been recognized as a non-taxable turnover, the company does not need to obtain a tax number in Estonia.
Conclusion
Registration of a person as a turnover tax obligee in Estonia is mandatory or voluntary.
The obligation to register as a turnover tax obligee arises for a person from the date when the taxable turnover of transactions made by the entity exceeds 40,000 euros from the beginning of the calendar year. (In the case of elector services, when reaching the 10,000 euro mark).
[vc_row][vc_column][vc_column_text]Turnover tax in Estonia is applied as a value added tax, except in seperate cases (h 2 §1 of the Turnover Tax Law). One of these distinct cases is the margin scheme.
According to h 3 §41 of the Law on Turnover Tax, when reselling used goods, as well as original works of art, collectible or antique items, a distinct procedure for taxation with turnover tax, or, in other words, a margin scheme, can be applied.
A margin scheme is a taxation procedure in which the taxable value of turnover is the difference between the selling and purchase price, minus the turnover tax included in it.
Thus, a person applying a particular procedure calculates the taxable value of the resale of used goods during the tax period based on the difference between the sale and purchase prices of used goods. This means that by applying a margin scheme, the amount of turnover tax payable to the Estonian Tax and Customs Department can be legally reduced.
Conditions under which a margin scheme can be applied:
The product must not be new (used).
The product was purchased for resale purposes.
The product must be purchased from an Estonian person or a person of another EU Member state who is not taxable.
The company does not use (did not use) the purchased product after purchase.
Since January 1, 2022, there have been breaks in the use of a distinct order:
If it is difficult to calculate according to a margin scheme for each unit of used goods, then when reselling such goods, the tax authority may, on the basis of a reasoned written request, grant the tax subject the right to calculate the taxable turnover to be declared for the tax period as the difference between the total selling and purchase price of such goods resold and purchased for the entire tax period, minus the turnover tax included in it.
If the taxable amount to be declared for the tax period has a negative value, it is not reflected in the turnover declaration, and in the daily accounting of the turnover tax of the tax subject is transferred to the next tax period.
If the taxable amount has a positive value, it can be reduced to zero due to negative taxable amounts of previous tax periods. Such calculation of the taxable value is justified in cases where the usual calculation is too complicated.
A taxable person who observes a margin scheme when calculating the taxable value does not indicate in the invoice or in another sales document the amount of turnover tax paid upon purchase of goods or the amount of turnover tax calculated from the calculated taxable value.
In the case of using a margin scheme, there are no differences in the form of the declaration and the methods of its submission. Transactions under the margin scheme must be declared monthly in the turnover tax declaration (KMD form).
You can find out more about the use of the margin scheme and the possibility of its application in your company by ordering a personal consultation from the specialists of LKS Consult OÜ . We offer professional accounting services for Estonian companies.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]Consolidated financial statements is the financial reporting of a group of interconnected organizations considered as a single economic entity or as a consolidated group. It describes the group’s property and financial position as of the reporting date, as well as its financial performance for the reporting period. A characteristic feature of consolidated group accounts is that the assets, liabilities, revenues and expenses of two or more legally separate entities are combined into a separate system of financial statements.
The accounting records of the consolidation group (concern) (hereinafter also a consolidated financial statement) include, in addition to the business transactions of the entity responsible for accounting, under its dominant influence
Dominant influence is the ability to make decisions about the financial and operational policies of a subsidiary.
Requirements for consolidated financial statement
parent and subsidiary must have one accounting period
the accounts of the subsidiary and the parent enterprise must be in the same currency
The subsidiary and the parent should have common accounting standards
When to submit a consolidated financial statement
According to RTJ 11 on accounting in Estonia, the main indicator for determining the influence of a related enterprise (dominant or significant) is the presence of control over that enterprise. Control may also exist if the participation of the parent enterprise is less than or equal to 50 per cent, but the parent enterprise (RTJ11 p.8):
1) has control over more than 50% of voting rights by agreement with other investors,
2) Supervises the financial and operational policies of the enterprise on the basis of a contract or charter;
3) Be able to appoint and withdraw most of the existing guidance and parent bodies;
4) has the power to determine the decisions of the assemblies of the current leadership and the higher-ranking bodies.
If the above conditions are met, the enterprise under control is considered to be a subsidiary and must be consolidated.
Payment of dividends by the subsidiary to the parent
According to Article 335 of the Estonian Commercial Code, the parent enterprise, which prepares a report for the economic year in the consolidated group, decides on the distribution of profits on the basis of consolidated reports of the consolidated group. Even if there is no obligation to compile a consolidated report, and they did not voluntarily consider it necessary to do so, the parent enterprise may transfer to its owners the dividends declared by the subsidiary on the basis of the annual accounting report with identical accounting periods if it does not reflect the subsidiary’s accounting at acquisition cost, a by sharing.
According to the report, it is possible to reflect the subsidiaries as a solo report of the parent enterprise, and, in the case of the consolidated annual accounting report, in the parent’s non-consolidated annual accounting report, the acquisition cost method or equity method.
LKS Consult OÜ offers full support in compiling a consolidated financial statement for your Estonian company and provides a full range of accounting services for an Estonian company. Contact our specialist and get a price offer as soon as possible.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]Estonian Tax and Customs Board maintains transparency in the cryptocurrency user environment and identifies individuals and businesses that do not conduct their business in an honest manner. Since most cryptocurrency transactions are cross-border, it is international cooperation that is becoming an essential part of information-sharing in the area of cryptocurrency risk.
Customs Board can determine a tax amount with a retroactive effect for a period of three years and, in the case of a deliberate non-payment of the tax amount, up to five years. In addition, it should be borne in mind that an intranet would be added to the unpaid taxes. It should also be noted that the presentation of false data in the tax return is a misdemeanour for which an individual can be punished with a fine of up to 1,200 euros and a commercial association – up to 32,000 euros.
If the false data is presented with the purpose of reducing the tax obligation and there is a concealment of a tax obligation of 40,000 EUR or more, it is a tax crime, for which a monetary penalty or a prison sentence of up to five years is prescribed. The penalty for concealing a tax obligation of more than 400,000 EUR is one to seven years’ imprisonment.
Cryptocurrency taxation for individuals in Estonia
Virtual currency is treated as property within the meaning of Clause 1 of Article 15 of the Income Tax Act. Income tax shall only be charged on gains (Article 37) from the sale or exchange of transferable and monetarily appraisable objects (Clause 1 of Article 15 of the Income Tax Act). In other words, profits received from the disposal of virtual currency, including exchange, is subject to income tax. The gain or loss on the sale of property is the difference between the purchase cost of the property sold and its sale price. The gain or loss on the exchange of property is the difference between the purchase cost of the property transferred in exchange and the market price of the property acquired through exchange (Clause 1 of Article 37).
It is necessary to record the amount of fiat money received and the amount of cryptocurrency assets acquired during each month. All the company’s cryptocurrency assets shall also be recorded in terms of euros on a monthly basis.
Cryptocurrency taxation for legal entity’s in Estonia
There is no specific tax on cryptocurrency for the Estonian companies. Crypto businesses follow the same rules as other types of companies in Estonia.
Taxation of Estonian companies is the most profitable in the European Union.
There is 0% corporate tax in Estonia. The tax on dividends or tax on profit distribution is 20/80. The tax rate for paying dividends is 25%. To pay dividends, a member of the company’s Management Board will need to make a profit statement for the current period.
The Estonian VAT rate is 20%. Companies are obliged to register a VAT number in a case when sales in Estonia exceed 40,000 EUR from the beginning of the calendar year. A company can also apply for VAT registration before this threshold value is reached.
LKS Consult OÜ offers accounting services for companies engaged in crypto-activities. It is important to bear in mind that cryptocurrency transactions are not subject to VAT.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]Accounting is an integral part of doing business on behalf of an Estonian company, the purpose of which is to keep records and obtain an overview of the economic performance and financial state of the company.
All companies and branches of foreign companies operating in Estonia are subject to accounting. Accounting for each company must comply with government-set standards for the results to be comparable and understandable.
Purposes
While working with us, our clients quite often need some professional advice and help. For these purposes, LKS Consult OÜ has developed the individual accounting consultation service.
The consultation aims to introduce the basics of Estonian taxation, accounting and familiarise a client with the Estonian Tax and Customs Board requirements.
LKS Consult OÜ offers consultation with one of the company’s accountant in order to have a complete understanding of the requirements and responsibilities of an Estonian company. Within the consultation, accountants will be glad to answer all questions of your interest.
During the consultation, you can learn about different kinds of enterprising, discuss Estonian taxation and legislation and get to know the requirements for accounting of the Estonian company. The exact content and cost depend on your enquiries.
The accountants of the LKS Consult OÜ are happy to recommend ways for optimising taxes of the Estonian company, assist your company by putting bookkeeping in order and submit declarations to the Estonian Tax and Customs Board.
Using the following page, you can choose one of our accountants for your consultation considering the area of expertise and language skills.
Potential topics to discuss during the consultation:
Introduction to accounting in Estonia
Dividends and taxes of the Estonian company
Employment
Salary calculation
Tax agreements between Estonia and other countries
Identification of potential risks associated with the activity of a company
Consultation procedure:
Choose the accountant you wish to consult with.
Please send your enquiries that we could assess the scope and cost of the consultation.
Receive price offer with comments.
Choose the time, language and form for your consultation (it could be arranged via phone call, Skype, Zoom, Viber, WhatsApp or sent by e-mail).
LKS Consult OÜ offers accounting services in Estonia, including accounting services for Estonian companies that already have a VAT number, as well as accounting services for companies without a VAT number. We have successful experience in various business segments and are currently developing over 900+ companies in Estonia and abroad. Therefore, our company additionally offers clients assistance in registering a VAT number in Estonia, assistance in obtaining an EORI number, and drawing up an annual report.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][vc_raw_html]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[/vc_raw_html][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]EORI is a unique number required for companies engaged in international trade in the European Union. Since July 1, 2009, an EORI number is mandatory for companies involved in international trade in case of import, transit, export or other customs procedures in order to identify the company throughout the European Union.
The EORI number is mandatory for economic operators engaged in the importation, transit, exportation or other customs operations.
A duly authorised management Board member or an accountant of the company can apply for an EORI number.
The EORI number is issued by the customs agencies of the member state in which it is established. Entrepreneurs established outside the customs territory of the union must be registered at the customs offices of the member state of the union, where they carry out or plan to carry out their very first customs operation. In Estonia, the EORI number is issued by the Tax and Customs Department.
One person can only have one (valid) EORI number and this unique number should be used for all Customs operations in the European Union and for any Customs-related activity.
A subsidiary must use the parent company’s EORI number.
Application
The legal representative of the legal entity may apply for the EORI number by submitting an electronic application in the e-MTA, choosing «Customs» > «Rights and obligations» > «Business registration and identification number (EORI)».
To file a petition, a representative of a legal entity must have an appropriate right of access in e-MTA. Entrepreneurs who are engaged in foreign trade and for whom the number(s) of the person liable for sales tax has been issued by other Member States of the European Union are required to indicate them in their application to EORI.
When personal and/or contact data are changed in the business register, the population register and, in the case of a non-resident, the tax liability register, the data in the EORI system are not updated automatically. The representative of the legal entity must himself update the data in the EORI system via e-MTA.
Application from abroad
To get the EORI number, you can file a request at the Tax and Customs Department’s location or electronically at the e-MTA. One person can only have one (valid) EORI number and this unique number should be used for all Customs operations in the European Union and for any Customs-related activity. To file a petition, a representative of a legal entity must have an appropriate right of access in e-MTA.
The legal representative of the legal entity may apply for the EORI number by submitting an electronic application in the e-MTA, choosing «Customs» > «Rights and obligations» > «Business registration and identification number (EORI)».
Entrepreneurs who are engaged in foreign trade and for whom the number(s) of the person liable for sales tax has been issued by other Member States of the European Union are required to indicate them in their application to EORI. When personal and/or contact data are changed in the business register, the population register and, in the case of a non-resident, the tax liability register, the data in the EORI system are not updated automatically. The representative of the legal entity must himself update the data in the EORI system via e-MTA.
The termination of a company’s activity is as natural a stage in the development of any business as its beginning. At the same time, it is often very difficult to liquidate an enterprise due to the large number of legal and business relations, obligations, and often debts that are part of the company’s business activity.
The provisions of the current Estonian Commercial Code governing the Business Register will be included in a separate Law on the Business Register and the existing Commercial Code will be substantially amended.
LKS Consult OÜ offers its customers the use of professional accounting software adapted for non-resident Estonian companies, allowing the secure exchange of information about the company’s activities with the accountant and the Estonian Tax and Customs Board.
Until July 1, 2021 rules for declaring and fulfilling turnover tax obligations under the special MOSS (MiniOneStopShop) procedure were in effect for enterprises providing e-commerce and telecommunications services.
The exchange of cryptocurrencies, as well as the exchange to fiat, is exempt from value added tax in accordance with § 16 (21) 4) of the Turnover Tax Law.
Turnover tax in Estonia is applied as a value added tax, except in seperate cases (h 2 §1 of the Turnover Tax Law). One of these distinct cases is the margin scheme.
Consolidated financial statements is the financial reporting of a group of interconnected organizations considered as a single economic entity or as a consolidated group. It describes the group’s property and financial position as of the reporting date, as well as its financial performance for the reporting period. A characteristic feature of consolidated group accounts is that the assets, liabilities, revenues and expenses of two or more legally separate entities are combined into a separate system of financial statements.
Estonian Tax and Customs Board maintains transparency in the cryptocurrency user environment and identifies individuals and businesses that do not conduct their business in an honest manner. Since most cryptocurrency transactions are cross-border, it is international cooperation that is becoming an essential part of information-sharing in the area of cryptocurrency risk.
Accounting is an integral part of doing business on behalf of an Estonian company, the purpose of which is to keep records and obtain an overview of the economic performance and financial state of the company.
EORI is a unique number required for companies engaged in international trade in the European Union. Since July 1, 2009, an EORI number is mandatory for companies involved in international trade in case of import, transit, export or other customs procedures in order to identify the company throughout the European Union.