For many e-resident founders, the concept of a “dormant company” in Estonia sounds simple. No sales, no invoices, no business. In practice, this is one of the most misunderstood areas of Estonian compliance and one of the most common reasons founders receive warnings, fines, or unexpected accounting costs later.
The Estonian Tax and Customs Board does not rely on labels or intentions. It looks at facts. Whether your company is considered dormant or active depends on what actually happened during the financial year, not on whether you planned to operate or not.
This distinction matters because it determines how your annual report must be prepared, what documentation is required, and whether simplified reporting is even allowed.
What does “Dormant company” mean in Estonia?
In Estonia, a company is considered dormant only if it had no economic activity at all during the entire financial year. This is a strict definition. It does not mean low activity, paused activity, or no revenue. It means zero.
A dormant company must meet all of the following conditions:
- No sales or income
- No expenses of any kind
- No bank account movements
- No subscriptions, service fees, or platform charges
- No salary, director fees, or reimbursements
If even one transaction appears on a bank statement, the company no longer qualifies as dormant under Estonian accounting rules.
This is where many founders get caught off guard. A single monthly software subscription, a bank fee, or a domain renewal is enough to make the company active.
What makes a company “Active” according to the Tax Board?
The Estonian Tax and Customs Board assesses activity based on evidence, not intent. A company is considered active if there is any sign of economic activity during the year.
This includes, but is not limited to:
- Any income or issued invoices
- Any expense invoices or receipts
- Any bank transactions, even small ones
- Capital injections or shareholder loans
- Subscription payments or service fees
A common misconception is that a company without revenue is dormant. In Estonia, this is not true. A company with expenses but no income is still active and must submit a standard annual report.
The Tax Board relies heavily on bank statements when reviewing activity. This is why bank statements are required even for companies that believe they were dormant.
Why the dormant vs active distinction matters for annual reports
Every Estonian company must submit an annual report, regardless of activity. What changes is the structure and complexity of that report.
Dormant companies may submit a simplified annual report confirming the absence of activity. Active companies must submit a full report, including financial statements based on actual transactions.
Misclassifying an active company as dormant leads to problems later. The Business Register may reject the report, or the Tax Board may request corrections. In more serious cases, repeated errors or non-compliance can result in fines or deletion proceedings.
This is why the dormant status is not something to guess or assume.
How the Tax Board verifies dormant status
The Tax Board does not rely on declarations alone. Dormant status is verified indirectly through documentation, most importantly bank statements.
If bank statements show:
- No transactions for the entire year, the company may qualify as dormant
- Any transaction at all, the company is treated as active
For companies without a bank account, a formal declaration confirming no activity is required. This declaration must be accurate. Submitting incorrect information can be treated as providing false data.
This verification approach is consistent and predictable, but it leaves little room for interpretation.
Common mistakes e-Residents make
E-resident founders often manage companies remotely, which increases the risk of small, overlooked transactions. Some of the most common mistakes include:
- Forgetting about automated subscriptions
- Assuming bank fees do not count as activity
- Paying small expenses from the company account “just once”
- Confusing no revenue with no activity
These mistakes usually surface during annual report preparation, when correcting them is slower, more expensive, and more stressful.
How Unicount helps clarify dormant vs active status early
At Unicount, we review company activity based on actual documentation, not assumptions. Before preparing an annual report, we verify whether a company qualifies as dormant or must be treated as active.
This early clarification allows founders to:
- Avoid incorrect filings
- Choose the correct annual report service
- Prevent delays caused by reclassification
- Keep costs predictable
Our annual report subscriptions are designed specifically to address this issue early in the year, before reporting season becomes crowded.
When should you check your company’s status?
The best time to determine whether your company was dormant or active is as soon as the financial year ends and bank statements are available. Waiting does not simplify the process. It only reduces flexibility.
Founders who clarify this early move through annual reporting calmly. Those who wait often find themselves reacting under pressure.
Final thoughts
In Estonia, the difference between a dormant and an active company is not a matter of interpretation. It is a matter of evidence. One transaction is enough to change the classification.
Understanding how the Tax Board actually decides helps founders avoid mistakes that lead to corrections, delays, and unnecessary costs.
If you are unsure about your company’s status, clarifying it early is the most practical step you can take.
FAQ
What is considered a dormant company in Estonia?
A dormant company in Estonia is a company that had no income, no expenses, and no bank transactions during the entire financial year.
Does a company with no revenue qualify as dormant?
Not necessarily. A company with expenses, subscriptions, or bank fees is considered active even if it had no revenue.
Do dormant companies need to submit an annual report in Estonia?
Yes. All Estonian companies must submit an annual report every year, including dormant companies.
What documents are used to confirm dormant status?
Bank statements covering the full financial year are used to confirm whether there was any activity. In some cases, a formal declaration is also required.
What happens if a company is incorrectly filed as dormant?
Incorrect filings may be rejected or require corrections. Repeated errors can lead to fines or further action by the Business Register or Tax Board.
Can Unicount help determine whether my company is dormant or active?
Yes. Unicount reviews your company’s activity based on documentation and confirms the correct reporting approach before preparation begins.
