[vc_row][vc_column][vc_column_text]When planning to conclude a deal with a counterparty from Estonia, you may have a problem finding reliable information resources based on which you can verify the necessary information about the counterparty, such as the date of establishment, location address, number of employees, turnover for previous periods, the presence of tax debts, etc.
In today’s interconnected business world, international partnerships and collaborations are common. However, the lack of easy access to this essential information can lead to uncertainty and potential risks. Therefore, it is crucial to seek assistance from experienced professionals or trusted service providers who specialize in due diligence and can help ensure the reliability of your potential Estonian counterpart. Making informed decisions and mitigating risks through thorough research and verification is the key to successful and secure international business ventures.
Verification of information that is available in the database ariregister.rik.ee. Such a verification will help to get a sufficiently capacious idea of the counterparty company.
The e-Business Register is the official portal of the Estonian state that includes the data of all legal entities registered in Estonia in a single environment. The Registration Department of Tartu County Court is the registrar. In addition, information on foreign companies is also available through the European Business Register.
While it is possible to conduct an independent examination of the company, it’s important to note that a comprehensive assessment, encompassing legal and financial aspects, is typically executed by legal professionals and accountants. We recommend utilizing our services to ensure a thorough and legally sound evaluation of the company, providing a comprehensive and accurate overview.
LKS Consult OĂś will be glad to help you in checking Estonian legal entities and verify the financial and tax information.
Estonian company legal check up service — 750 EUR includes:
Information about the legal status of the company (operating company, reorganization, bankruptcy, liquidation)
The address of the legal entity
A list of documents of legal entities that are available at the current time (decisions of members of the Management board, financial statements, etc.)
Extract about the company with data on the amount of the authorized capital, shares, founders, members of the Management board and participants
The history of events for the entire existence and activity of the company
Copies of the company’s financial statements for a certain year
LKS Consult OĂś will be happy to provide you with a legal check up on Estonian companies based on your requirements. Please leave your request on our website and our specialists will contact you as soon as possible.[/vc_column_text][us_btn label=”contact us” link=”%7B%22url%22%3A%22https%3A%2F%2Fwww.estonia-company.ee%2Fcontacts%2F%22%7D” align=”center”][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]It is of utmost importance to consider partnering with a legal entity in the chosen jurisdiction when you have a valuable client. Our expertise, dedication, and comprehensive solutions ensure that your client’s needs are not only met but exceeded. We bring a proven track record of delivering exceptional results, making us the ideal choice for a successful partnership that can enhance your client relationships and drive mutual success.
Our company frequently receives inquiries from various service providers, indicating their clients’ keen interest in commencing business operations in Estonia. To ensure a mutually advantageous process for all parties – our company, the service providers, and the clients – it is imperative to establish a collaborative partnership in advance. By doing so, we can guarantee a legal, efficient, and seamless progression of the business setup process, ultimately fostering success and satisfaction for everyone involved.
Our company is always eager to initiate partnerships based on mutual agreements and shared benefits. We are committed to facilitating successful collaborations. From our side, we can offer two distinct options to commence the process:
Start the process immediately based on the selected service and provide your client to us. In this scenario, the service provider has the flexibility to adjust or get their commission.
You can assist the client by yourself and adjust a commission above our price based on your preferences and requirements. We will provide you the services, and you can communicate based on the client name with me.
In both cases, our company is dedicated to ensuring a smooth and productive partnership by signing a cooperation agreement in advance.
In the event that the second option is preferred, it is crucial to formally enter into a Non-Disclosure Agreement (NDA) in advance. Within the business context, collaborative endeavors are commonly acknowledged as integral to the attainment of success.
Partnerships between companies, individuals, or organizations can be powerful catalysts for innovation, growth, and achieving common goals. However, as these collaborations grow more complex and encompass sensitive information, ensuring security and trust becomes paramount. This is where Non-Disclosure Agreements (NDAs) play a pivotal role.
NDAs are legally binding documents that define the terms and conditions under which confidential information is shared between parties. Their importance cannot be overstated when embarking on a collaborative venture. Here’s why they are essential:
Protecting Sensitive Information: Collaborators often need to share proprietary data, trade secrets, and other sensitive information. An NDA establishes a legal framework to protect this information, ensuring it remains confidential and is not disclosed to unauthorized parties.
Building Trust: NDAs create an environment of trust and assurance. They demonstrate a commitment to protecting each other’s interests and ideas, which is crucial for fostering a strong, mutually beneficial partnership.
Security in Communication: Secure communication is vital in any collaborative effort. NDAs set the expectation that sensitive discussions will remain confidential, encouraging partners to communicate openly without fear of information leaks.
Enforcing Exclusivity: The exclusivity clause within an NDA can prevent the collaborating parties from engaging with clients who came from your side or disclosing information to them. This exclusivity fosters a sense of unity, making it clear that both parties are working exclusively to help each other succeed.
Defining the Rules of Engagement: NDAs establish clear rules and guidelines for handling confidential information, thereby reducing the risk of misunderstandings and disputes. This clarity ensures that both parties are on the same page and that there is a shared commitment to the partnership’s success.
Achieving Common Goals: Collaborations often have specific goals and objectives. NDAs help partners remain focused on these goals by minimizing distractions related to the misuse or mishandling of sensitive information.
These agreements create a foundation of trust, security, and exclusivity that is essential for achieving common goals. By safeguarding confidential information, encouraging open communication, and providing a clear roadmap for the partnership, NDAs play a crucial role in the success of collaborative endeavours. So, when embarking on a new partnership, remember that an NDA is not just a formality but a key tool for ensuring the prosperity and security of our shared ambitions.
LKS Consult OĂś is consistently prepared and eager to initiate a partnership. Please submit your request and inform us of your questions.[/vc_column_text][us_btn label=”contact us” link=”%7B%22url%22%3A%22https%3A%2F%2Fwww.estonia-company.ee%2Fcontacts%2F%22%7D” align=”center”][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]An Estonian company may be changed or transformed into another type of company by the decision of the owners/shareholders. Reorganization is often the simplest, fastest and cheapest alternative to two separate procedures – liquidation of the company and creation of a new one. But what should be noted in this case?
When comparing a joint-stock company and a private limited company, the law imposes much more serious requirements on a joint-stock company. For example, a joint-stock company has a three-tier management structure, an auditor’s requirement and an obligation to audit the annual report even if the company does not operate during the year. As a result, the maintenance costs of an excise company are much higher than those of a limited liability company, so it may be advisable to transform a joint-stock company into a limited liability company. Below is a brief description of the steps to be taken to transform a joint-stock company into a private limited liability company in Estonia.
Conversion process
If the company wants to change the structure, you need to follow certain procedural steps:
The Board of the transforming company must prepare a written report on the transformation, in which the transformation is legally and economically justified.
The report shall be submitted to the shareholders together with the report for the last financial year for review at least one month prior to the general meeting that adopted the conversion decision.
If more than six months have elapsed since the end of the financial year report at the time of the general meeting, an interim balance shall also be established. A transformation report need not be prepared if there is only one shareholder in the converted company or if all shareholders agree that a transformation report is not prepared.
The decision on transformation is made by the shareholders at the general meeting with the adoption of the decision on transformation. General meeting shall be carried out as required. The decision to reorganize shall be in writing and shall be supported by not less than 2/3 of the votes presented at the General Meeting, unless the Statute requires otherwise.
A new charter must be drawn up for the new limited liability company. The charter must be approved by a decision on transformation.
In addition, the members of the Board shall be elected together with the decision.
 The decision on conversion shall specify:
into which type of business the joint stock company will be transformed
new company name
shareholder replacement ratio
the amount of authorized capital, the rights granted to shareholders
the effects of the transformation on employees
the time at which transactions of a reorganized society are considered completed by a newly reorganized society
Also, when transforming a joint-stock company into a limited liability company, it is necessary to inform the holder of the securities registry.
Application for conversion to a business register
A company is deemed to have been transformed if the transformation is entered in the commercial register. The board of the transformed company must apply to the Business Register for conversion to the Business Register – this can be done if at least one month has elapsed since the conversion decision was made.
Together with the application should be provided:
minutes of the shareholders’ meeting
conversion solution
charter of the New Association
transformation report, balance
board and board members’ data
confirmation by the securities registry holder of the conversion notification.
The members of the Board should also confirm in the application that they had not contested the conversion.
For the incorporation of the company into the Business Register, the state must pay 130 euros. Applications shall be processed in the commercial register within five working days. By making the transformation in the commercial register, the company is considered to be transformed. After conversion to the Business Register, the company must immediately inform creditors of the company’s transformation by issuing a notice in the official notices.
Transformation takes at least two months.
A month before the General Meeting, shareholders must be presented with a report on the conversion.
A month after the decision is made, an application can be submitted to the Business Register.
The application will be considered in the business register within 5 days.
For detailed advice on the transformation of your Estonian Company, please contact the legal department of Service OĂś and get answers to your questions.[/vc_column_text][/vc_column][/vc_row][vc_row][vc_column][us_btn label=”contat us” link=”url:https%3A%2F%2Fwww.estonia-company.ee%2Fcontacts%2F” align=”center”][/vc_column][/vc_row]
[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 free movement of capital is one of the four fundamental freedoms of the single market of the European Union, and in order to safeguard these freedoms, it is necessary to simplify the rules and remove the restrictions that are an obstacle to the movement of capital between EU member states.
Access to capital ensures economic development, and the main sources of capital are banks. Excessive reliance of financial markets on banking activities does not benefit the financial system, therefore it is important to develop other functions of the financial market. The financial market must be diverse and develop in a balanced manner. Investment and pension funds are one of the largest non-bank financial intermediaries, and their development ensures a more efficient functioning of the financial market.
To this end, on 18 May 2022 the Estonian Parliament adopted the amendment to the Investment Funds Act and related acts, which for the most part entered into force on 3 June 2022.
The amended act simplifies the activities of investment funds in other EU countries.
The purpose of these amendments was to simplify the marketing of investment funds to investors from different EU member states. The main objective of the law is to improve the functioning of the single market for EU investment funds, which is useful for investors, as they will have easier access to investment funds of other EU member states.
According to statistics, 70% of the assets held by investment funds are offered in the fund’s countries of origin, that is, the funds are not interested in placing their funds in other EU countries than the country of origin. The main reason why funds do not want to offer their product outside the country of origin is excessive regulation.
The new law removes restrictions and simplifies activities in other countries. For example, under the amended law, alternative funds registered in the EU (i.e. venture capital funds intended for professional investors) that offer a product in another EU member state no longer need to have a representative, which is expensive, and before entering the market, the fund can assess its marketing potential in the market.
This means that it will be easier for foreign funds to gauge the interest of local professional investors in the investment idea or strategy of the fund manager before offering shares, stocks, or units in these markets.
Today’s stock market in Estonia is not yet diverse. The new law makes it easier for funds established in other EU countries to enter the Estonian market and offer Estonian investors diversified investment opportunities. Since the law is based on EU norms, Estonian funds are now able to offer their products more easily in other countries of the European Union.
LKS Consult OĂś will assist you in registering a small alternative fund in Estonia. In the field of financial investment structures, we support our clients at all stages of their activity. Each new cooperation begins with a consultation, where the basic principles are discussed and the mechanism of work of the future company is determined. The next step is to prepare a legal decision on the fund’s activity and draw up step-by-step instructions for registering a small alternative fund in Estonia. Contact us and get an offer today.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]From 1 October 2022, data of the e-Business Register, Estonian commercial register, will be available for free.
Previously, in order to view the data held in the e-Business Register, it was necessary to pay a fee when one requested data about companies, non-profit organizations, foundations, state and municipal institutions.
According to the Minister of Justice, free provision of data will help to make the business sector more transparent and innovative. “For the development of the information society, free access to high-quality data is necessary, first of all, to those that are at the disposal of the state. The availability of information helps to ensure the transparency of the economy and creates the prerequisites for the development of intellectual services based on data”, Minister of Justice Lea Danilson-Järg explained. “A transparent business environment means that the consumer knows whose services and products they are consuming, and entrepreneurs can explore the history of the cooperation partner when establishing business ties. The transparency of the economy is in the interest of society as a whole.”
Each Estonian company will also be able to verify the accuracy of its data entered in the e-Business Register and, if necessary, correct it. In particular, users are advised to check that their personal contact details — telephone number, email address or home address — that they don’t wish to disclose publicly are not entered as company contacts.
The e-Business Register will charge a fee for requesting data about non-profit organizations, as they may contain special types of personal information that are subject to reuse restrictions.
The staff of the LKS Consult OĂś will be happy to enter corrections in the data of your company in the e- Business Register, as well as help with the establishment of your company in Estonia as soon as possible.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]The service/good is subject to VAT in the country in which the service is traded. If in the case of goods it is always possible to identify the State in which the goods are located at the time of dispatch or access to the buyer, in many cases it is difficult, if not impossible, to determine the actual country of supply of the service – especially if the main instrument is the «instrument» is a computer or a smartphone. Therefore, the rules for determining the place where services are traded are often very conditional and relate to the location of either the service provider or the recipient, rather than to the actual place where the service is delivered.
Where do services turn?
The rules for taxing turnover in services are much more complex than those for taxation of goods.
If an Estonian turnover taxable person renders a service whose place of turnover is not Estonia and the person himself does not have to tax the service in the country where the turnover occurs, he taxes the service on turnover in Estonia at a rate of 0%.
This is an important difference compared to the taxation of goods: if the Estonian obliged turnover tax person sells goods whose place of circulation is not Estonia, it does not tax the transaction in Estonia at 0% and does not reflect it in the turnover declaration in Estonia; taxation always takes place according to the rules of the turnover state.
Basic rule of VAT
If no exception applies, the location of the turnover is determined by a so-called basic rule with two sides:
The place where the service is traded is Estonia, and the service is taxable in Estonia if the service is taxed to an Estonian person, or is subject to a turnover tax by a person in Estonia who is not obliged to pay a turnover tax to a person in another European Union country (hereinafter EU) or to a person who does not conduct business from a non-EU State (c. 1 €10 Turnover Tax Act; Käibemaksuseadus – hereinafter KMS).
If the service provider is liable to a turnover tax on a person in Estonia, the service itself is taxed (and if it provides a service under the basic rule to another person liable for a turnover tax in Estonia)If the service is provided by an entrepreneur of a foreign State, the service should be taxed by the recipient on the principle of reverse taxation.
When an Estonian obligor renders a service to an obligor for a turnover tax of another EU country or to an entrepreneur from a non-EU state, the place of turnover is not Estonia (para. 9.4 a.m. 10 KMS)And the obligor of the turnover tax declares its turnover in Estonia at a rate of 0%, while the service, under the basic rule of the turnover tax on a person of another EU country, is reflected both in the turnover declaration and in the turnover report within the Community (form VD). This part of the Basic Rule also applies when a service is received by such a business operator from a non-EU State (since that year also the United Kingdom)which does not have the registration number of the person liable for the turnover tax.
It should be borne in mind, however, that if a person liable for a turnover tax in Estonia provides a service or receives a service subject to reverse taxation through a permanent place of business in another country, it will tax turnover and declare a service in the country of its permanent place of activity, not in Estonia. In the examples given in this article, it is always assumed that the service was rendered or obtained through the location of the person liable for the turnover tax in Estonia.
The place where services are traded is always the country where they are delivered.
There are, however, certain services whose place of circulation is always the State where the service is actually rendered and which are always taxed on turnover in that State at the rate established there for the service concerned, – this rule also applies if the recipient of the service is an entrepreneur from another country. When such services are provided in Estonia, they are always taxed at the rate approved in Estonia for these services, irrespective of the recipient.
These services are as follows:
All services related to real estate in Estonia – construction and repair services, accommodation services, renting or renting of real estate, design of a specific real estate object (but not model projects), and so on
Restaurant and catering services in Estonia
Carriage of passengers within Estonia
Tickets for performances, concerts, entertainment and participation in conferences and seminars organized in Estonia
Short-term rental in Estonia of a vehicle (up to 30 days, a vessel up to 90 days)
In addition to the mentioned services, the place of origin of the turnover and the rate of the turnover tax do not depend on the person receiving the service and if, during the carriage of passengers taking place on the territory of the EU, provide restaurant and catering services on board a water or air transport vehicle or on a train, in which case the place of turnover is always that EU country, from where a water or air transport vehicle or train departs for an international voyage and the service is taxed according to the rules on turnover of that country.
Thus, if restaurant or catering services are provided on EU territory by water or air transport or on a train leaving Estonia for an international voyage, the service is taxed on turnover in accordance with the Estonian Turnover Tax Act.
The fact that the place of turnover is Estonia does not necessarily mean that the service is taxed on turnover at the rate of 20% or 9% (accommodation services): Article 15 KMS, part 4, paragraphs 2-15, lists services whose turnover tax is 0% and then, where the place of turnover is Estonia. In the case of restaurant and catering services provided in EU territory by means of a vehicle on an international flight from Estonia, it is important to know that, according to Part 4, paragraph 2, of Article 15 KMS, This tax is levied at a rate of 0 per cent on the service required by the voyage for a passenger on an international voyage on board a ship or aircraft (which also includes food), but not on the service required for the voyage provided by the train.
Services where the location of turnover depends on the recipient of the service
In the case of some services, the State in which the service is traded depends on the status of the service recipient as a duty of return (whether the service recipient is liable for turnover tax or not).
When providing services to a liable turnover tax person in another EU country or to an entrepreneur from a non-EU country, the basic rule applies.
If the recipient of the service is not subject to turnover tax by a person in an EU country or by a non-EU entrepreneur, the place of turnover (and turnover tax is imposed according to the rules of the country where the turnover originated) is defined as follows:
Provision of cultural, artistic, sports, educational, scientific or recreational services or services related to a trade fair or exhibition – trafficking occurs in the country where the event takes place.
Long-term lease of a vehicle – turnover arises in the country of residence of the recipient of the service (except for a long-term lease of a vessel for an interest or a pleasure craft, which is traded in the country of lease if the service is performed through a location or a fixed place of activity in that country).
Work with movable object – the turnover occurs in the country where the movable object is located.
Freight traffic and its organization – Traffic occurs in the country where the transport takes place in full or where it begins.
Freight-related by-products – the trade originates in the country of supply.
Brokering – Trafficking occurs in the same country where the mediated service is traded.
If an Estonian entrepreneur has a duty to tax the turnover in the country of origin of the service, and it has to tax the service on turnover and declare in that country – it declares the service only in the country of turnover and does not simultaneously reflect it in the turnover declaration in Estonia at 0% (base – c. 6Âą = = 15 KMS).
In this article the term «transfer of an enterprise» will be used in the meaning of the Law of Obligations (Võlaõigusseadus, hereinafter – VĂ•S), according to which:
The transferor may, by contract with the purchaser, undertake to transfer the business to the purchaser. The enterprise may pass to the purchaser also on the basis of the law. (p. 1 § 180 VÕS)
The enterprise includes things, rights and duties related to the conduct of the business of the enterprise and its servicing, including the contract related to the enterprise. (p. 2 § 180 VÕS)
Therefore, from the quoted provisions of the law it should be quite clear that the term «enterprise» refers to certain business activities for which things and other assets are used (which are essentially rights in one way or another, whatever terms are used to refer to them in legal acts governing accounting and the payment of taxes), contracts are concluded, resulting in persons Business owners (let us call them entrepreneurs) have rights and obligations.
Taxation aspects
According to article 35 of the Tax Act, if the law provides for the succession of rights and obligations from one person to another, then all monetary and non-monetary claims and obligations (obligations) are transferred to the successor established in the Tax Act, in the specific tax laws and in the laws specified in Article 3, Part 4 of the Tax Act (including the Savings Pension Act and the Unemployment Insurance Act)which are not intrinsically linked to the person. There is no obligation to pay fines (more precisely, not fines, but sunniraha, that is, the sums of money imposed for the purpose of compulsion to fulfill an obligation).
As can be seen from article 182VĂ•S, part 2, not only all assets (things and rights) of the transferred enterprise are transferred to the purchaser of the enterprise, but also all duties related to the transferred enterprise, that is, the purchaser of the enterprise is the successor of that entrepreneur, from which the enterprise is received – of course, it is the transferee of the transferable enterprise only. If this is the case, he is the legal beneficiary of the tax rights and obligations of the enterprise.
Simply put, if the entrepreneur who transferred the enterprise has not paid, for example, some tax related to the transferred enterprise, the new owner of the company will have to pay the tax.
It is this tax succession that explains why the Turnover Tax Act does not apply to the transfer of a turnover business (cf. paragraph 1.2. 4 of the Act). No, as the transferee of the business, is given all rights and duties related to the turnover tax of the transferred business. The extent to which the taxpayer is literate and conscientious is the entrepreneur from whom the enterprise is derived.
Accounting aspects
The accounting aspects of the transfer of an enterprise are essentially clear from the purchaser’s point of view, since the transfer of an enterprise is a consolidation of business within the meaning of the Accounting Service Instruction RTJ 11 «Business associations, as well as reflection of subsidiaries and associated companies». Indeed, according to RTJ 11, clause 5, business association (of course RTJ 11) does not occur only when one person acquires control of another person by purchasing or sharing shares, but also when control over a business is created by the acquisition of assets and liabilities related to that business.
As follows from RTJ 11, if the purchaser, after entering into the contract referred to in article 180 VĂ•S, receives the enterprise from a person not associated with it (with the purchaser), then the business association should be reflected by the acquisition method (or sometimes referred to as the purchase method) described in paragraphs 19-49 of RTJ 11.
If, however, both persons who have concluded the contract referred to in Article 180 VĂ•SÂ (i.e., the transferor of the enterprise and the purchaser of the enterprise) are under common control, then the consolidation of the business should be reflected using the adjusted acquisition method, described in paragraphs 50-55 of RTJ 11.
Nor is it conceptually difficult to record a transaction in the accounting of a person who transfers an enterprise under a contract established in article 180 VĂ•S. When an enterprise is sold, it is necessary to record in the accounting the financial result obtained from the sale of the enterprise (profit or loss), which is calculated as the difference between the income from the sale of the enterprise and the value of the transferred net assets (i.e., transferred assets less transferred liabilities).
In the profit statement, the financial result obtained from the sale of the enterprise is reflected in other operating income (muud äritulud) if a profit is made, or other operating expenses (muud ärikulud) if a loss is incurred, since, first, the sale of an enterprise is in no way a permanent activity, therefore, the income from the sale of the enterprise is not to be reflected in the income from sales (mügitulu) and, second, the sale of the enterprise for the person who sells the enterprise, hence, a business is not a financial gain. And if so, in the profit statement there is only one place – the article «Other operating income» (Muud äritulud), or to reflect the loss – the article «Other operating expenses» (Muud ärikulud).
The most common nuances involved in the sale of a company are those to be taken into account in the course of both accounting and tax returns.
[vc_row][vc_column][vc_column_text]While the announcement of the meta-universe implies that the digital world may soon face a paradigm shift unprecedented since the advent of social networks, internal notification from CEO Andrew Bosworth may mean, that Blockchain will be the basis for the future of the Internet
It is believed that the Internet, an invention that has often been compared to a printing press in general for human society, has gone through three specific iterations. Web 1.0, or read-only, was mainly used as an information transfer method with little input from users. Web 2.0, or the Internet for reading and writing, allows users to enter their own content on the Internet. It allowed it to explode in importance through the democratization of content creation, which led to the Internet as we know it today.
Finally, experts at the frontier of emerging technology are beginning to note that due to recent innovations such as the blockchain, we may be in the first stages of Web 3.0. While the definition of this yet emerging concept can be nebulous, we may very soon see the dawn of an internet where private ownership would set the stage for a decentralized network of the people and for the people.
It is here that Meta, the leading force behind Metaverse and VR technology, appears. In a note sent by Meta’s chief technology officer and acquired by the New York Times, Mr. Bosworth expanded the vision in which the nascent social network would be designed to be organically compatible with the nascent Blockchain. In the note, he urges caution and advises them not to rely solely on distributed ledger systems, saying that “there are not many places where we can rely solely on them. ” This being said, he does argue that the technology has the potential to have “profound impacts on our industry over the next decade.” More so, he believes that the best path moving forward would be to work hand-in-hand with the crypto industry rather than to compete with them. He noted that “if we see an opportunity to work jointly with entrepreneurs in the web3 space I expect it will be worth the effort.”
Mr. Bosworth’s rank places him in charge of Meta’s projects based on AR and VR technologies, a position that he has used to advance the company’s work on NFTs as well as in investments pertaining to smart contracts, DAOs and internet-native communities internally coordinating through crypto tokens.
This note could not have occurred at a more important time, as recent innovations have made even titans of Big Tech tread cautiously. The alphabet, Google’s parent company, has shown a clear reluctance to enter cryptospace. By contrast, Meta has already started experimenting with blockchain-supported technologies. This included attempts to create a global digital currency for the Facebook and Whatsapp networks. Perhaps, by giving credence to the thin ice that underlies this emerging sector, the project has experienced a retreat from the lead project and a complete rebranding under the pressure of regulators.
Estonia is known to be very tax-friendly for starting a business. LKS Consult OĂś team can help you establish and develop your business in Estonia.[/vc_column_text][/vc_column][/vc_row]
[vc_row][vc_column][vc_column_text]The topic of cryptocurrency and taxes is relatively new from the point of view of taxation in Estonia and despite the fact that crypto assets are not specifically mentioned anywhere in Estonian tax legislation, they are regulated by ordinary tax rules, because the company’s turnover is taxed. This means that it is legal to trade, own and store crypto assets in Estonia.
NFT is the same asset as other cryptocurrencies. The only difference is that it is not necessary to use the FIFO method or the weighted average method, because NFT is distinguishable, and the value of the acquisition and the cost of selling each particular crypto of the asset is known. According to the Estonian Tax Department, The tax exemption on movable property does not currently apply to the NFT because the Estonian Tax and Customs Department considers that the NFT cannot be used for personal purposes, but this may change in the future.
The sale of NFT tokens is an electronic service subject to a value-added tax. The VAT rate is 20 per cent or 0 per cent, depending on the specific situation. It is important to bear in mind that taxation arises only when a company is registered as having a sales tax obligation. Obligation to register as a sales tax liability arises when the company is liable for a turnover of 40,000 euros from the beginning of the calendar year. Please note that sales tax payers can register before reaching a turnover of €40,000.
In order to find out at what rate the sale of NFT tokens will be charged, we recommend you to contact our specialist for individual advice.
However, if NFT is sold to persons of another EU state who are not registered as liable for sales tax, and if the total turnover of all EU countries by such legal persons has reached 10,000 euros, it is either necessary to register as a sales tax liability in each of the states where the partner is operating, or to register in Estonia as a sales tax liability and join the OSS system.
How do companies declare taxes on cryptocurrency?
VAT tax returns are filed every month up to the 20th day with the Estonian Customs Department.
The profit from the sale of NFT to the Estonian Company is taxed only if it is distributed. As long as these funds are not withdrawn from the company through dividends or any other means of distributing profits, the transaction is tax-exempt.
Also, if in the case of the business of the Estonian Company, some transactions are profitable and some are unprofitable, when filing the declaration the company can account for losses, thereby reducing the tax burden. As long as the company does not distribute dividends, no tax is levied. Income and social tax returns are filed before the 10th of each month.
In addition, income tax may be levied, for example, on special benefits or on payments and expenses not related to the business of the company, as well as in case of expenses for gifts and donations and for reception of guests and business partners.
How do individuals declare taxes in cryptocurrency?
Individuals in Estonia file their tax returns once a year. No other interim declaration is required by tax legislation. The annual declaration should state:
Transaction date
Purchase price
Sale price
Only transactions that make a profit are declared, and the tax rate is always 20 per cent. Loss-making transactions are not counted. It is also important to note that crypto assets are not equities, which means that an investment account cannot be used to delay any tax claims, as crypto assets do not fall within the legal definition of shares/securities.
For detailed advice on the taxation of NFT tokens in Estonia and other accounting services in Estonia, we recommend contacting the accountant or tax consultant of LKS Consult OĂś .[/vc_column_text][/vc_column][/vc_row]
An Estonian company may be changed or transformed into another type of company by the decision of the owners/shareholders. Reorganization is often the simplest, fastest and cheapest alternative to two separate procedures – liquidation of the company and creation of a new one. But what should be noted in this case?
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 free movement of capital is one of the four fundamental freedoms of the single market of the European Union, and in order to safeguard these freedoms, it is necessary to simplify the rules and remove the restrictions that are an obstacle to the movement of capital between EU member states.
From 1 October 2022, data of the 
The service/good is subject to VAT in the country in which the service is traded. If in the case of goods it is always possible to identify the State in which the goods are located at the time of dispatch or access to the buyer, in many cases it is difficult, if not impossible, to determine the actual country of supply of the service – especially if the main instrument is the «instrument» is a computer or a smartphone. Therefore, the rules for determining the place where services are traded are often very conditional and relate to the location of either the service provider or the recipient, rather than to the actual place where the service is delivered.
While the announcement of the meta-universe implies that the digital world may soon face a paradigm shift unprecedented since the advent of social networks, internal notification from CEO Andrew Bosworth may mean, that Blockchain will be the basis for the future of the Internet
The topic of cryptocurrency and taxes is relatively new from the point of view of taxation in Estonia and despite the fact that crypto assets are not specifically mentioned anywhere in Estonian tax legislation, they are regulated by ordinary tax rules, because the company’s turnover is taxed. This means that it is legal to trade, own and store crypto assets in Estonia.