Every Estonian company has to submit annual accounts (annual report) to the Estonian Business Register 6 months after the end of the financial year. The annual report includes your company’s balance sheet, Profit & Loss statement and management report about the performed activities. The report is simpler for micro and small enterprises with less mandatory information to disclose. Even if your company hasn’t started trading yet, submitting the annual report is the one thing you need to do to ensure your company and its board are compliant with Estonian laws and not fined.
Unhappy government
Estonian Ministry of Justice deputy undersecretary Viljar Peep mentioned in a 2021 press release, that only 60% of legal persons in Estonia submit their annual report in time. 20% submit it late and 20% do not submit it at all. This last 20% has been annoying the Estonian government for some time and now the government has finally acted. There have been rumours about the Estonian tax office taking over the process to have a stronger enforcer to make non-compliant companies submit their reports on time. Currently, it is still the Tartu County registration department that controls the submissions through the e-Business Register. Recent legislative changes have also made it easier for the court to delete companies that do not submit annual accounts on time. At the earliest, your company can now be deleted three months after you have missed the deadline. An additional deadline for submission with a deletion warning is now processed automatically.
The cost of not being compliant
Complying with the annual report submission requirement is something that many small companies have neglected. The bad news for Estonian e-residents having companies in Estonia with annual reports overdue is that starting from 2022 the court has started sending fines for each overdue annual report. These fines may end up payable by the board member who did not comply with the requirement of submitting an annual report 6 months after the end of the financial year.
For companies registered through the Unicount API service, the financial year always is stated in standard articles as a calendar year. This means that the deadline for submission for a company registered before 1 July 2021 is 30 June 2022. Companies registered on or after 1 July can submit their annual reports for the first 18 months being their first financial year. This would mean one year later than the companies registered on 30 June 2021.
Basics of the annual report
The official advice of Unicount for any Estonian company owner trying to figure out how to prepare and submit their company’s annual report has always been very simple: get a qualified accountant to do it for you. Because Unicount has a large number of dormant companies registered with us we have previously produced a dormant accounts manual to do it yourself at your own risk. Here is the link to the manual. Dormant companies can be micro companies with a simplified annual report if they only have one shareholder and board member. Please note that officially there are no dormant accounts or companies in Estonia so you would just submit accounts for a company that did not trade at all.
How do the fines work?
You would first get an email warning with a new deadline for the submission. This is what it looks like in Estonian. You would only receive it if you have a working email registered as your official company email on the Business Register. Unicount clients would normally receive these notifications with unofficial translations to their Client Dashboard. This applies if the company’s public email is set to 14614272@eesti.ee to avoid spam and to let Unicount process all the official email notices from government agencies.
This penalty warning is very kind as it offers 6 months for the board to submit the overdue annual report. We have also seen warnings giving you 15 or 30 days to submit an annual report. After ignoring this warning you would soon receive the actual fine which the court bailiff can enforce in Estonia. A bailiff can arrest personal and business bank accounts to get the fine and additional service charges to be paid by the company or its board member.
This is what the fine would look like. It includes the bank accounts of the Ministry of Finance and reminds you that the fine can be repeated until the annual report is submitted. Paying the fine does not mean that you do not have to submit the annual report anymore. Here is a sample fine of 300 euros. Please note that the fine can be anything between 200-3200 euros.
Hiring an accountant
Considering the cost of micro accounts from a professional accounting firm you most probably pay more as a fine than you would for the actual accounts made in time. if you need help, feel free to contact our accounting team or purchase the annual accounts minimum fee product from your Unicount Client Dashboard accounting menu to start the process of annual accounts preparation. We would assess the volume and give you an additional quote if we cannot prepare your accounts within the minimum fee.
Other consequences
If you are an Estonian e-resident board member and have not been compliant with Estonian laws the Police and Border Guard can and most probably will ask about it when you try to renew your e-resident card. This means that if you want to stay an Estonian e-resident you would anyway need to submit the overdue annual reports under time constraints and straightforward questions about your non-compliance from the police.
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