If you’re running a company in Estonia, whether as an e-resident or a local entrepreneur, you’ll eventually have to deal with annual reports. It’s definitely not the most exciting part of running a business, but it’s an important one. Annual reports help ensure transparency, keep your business in good standing, and help you avoid unnecessary penalties.
We’ll cover everything important you need to know about annual reports in this post, but if you’d just like a quick overview, we’ve provided a summary of the main points. We’ll go into more detail below.
Quick summary
- The annual report is mandatory for all legal entities in Estonia, with no exceptions (yes, even dormant companies – although for dormant companies, the process is quite simple).
- The annual report must be submitted 6 months after the end of the financial year (for most companies, this means that the deadline is June 30).
- What needs to be included in the annual report depends on how your business is classified (micro-enterprise, small or medium-sized business, or large business).
- The report must be filed in Estonian. You can also include an English version, but an Estonian version is a must.
- Failure to submit the report can result in fines and penalties, and in a worst-case scenario, the deletion of your company.
- Depending on your revenue, assets, and number of employees, you might require an audit in addition to completing an annual report.
- The annual report can be submitted electronically through the e-Business Register or via a notary.
What is an annual report?
In Estonia, all companies – even those owned by e-residents 😉 – must submit an annual report to the Estonian Business Register. This report provides an overview of your company’s financial performance and activities during the previous fiscal year.
Even if your company had no activity, you still need to submit a report. No exceptions.
The annual report typically includes:
- Financial statements (balance sheet and income statement)
- Management report (if applicable)
- Auditor’s report (if applicable)
The good news is that Estonia’s digital systems make the filing process relatively painless compared to many other countries.
Annual report requirements based on your business size
What the annual report needs to contain depends on the size of your company. Estonia categorizes businesses into four main categories: micro-enterprises, small businesses, medium-sized businesses, and large businesses.
Micro-enterprises
Micro-enterprises are the smallest category and have the least reporting requirements. A micro-enterprise is defined by meeting the following conditions:
- Total assets up to 175,000€
- Liabilities not exceeding the owners’ equity
- One shareholder who is also the member of the management board
- Sales revenue during the financial year is a maximum of 50,000€
Micro-enterprises can submit a simplified report that includes only the key financial statements without a management report (although they can still include it if they wish).
Small and medium-sized businesses (SMEs)
A small business is defined by meeting at least ONE of the following conditions:
- Total assets exceed 4,000,000€
- Sales revenue exceeds 8,000,000€
- An average of 50 employees during the financial year
A medium-sized business is defined by meeting at least ONE of the following conditions:
- Total assets exceed 20,000,000€
- Sales revenue exceeds 40,000,000€
- An average of 250 employees during the financial year
Small and medium-sized businesses are required to submit a more detailed report, which includes financial statements and a management report.
Large businesses
Large businesses have the most extensive reporting obligations. A company is considered large if it meets at least TWO of the following conditions:
- Total assets exceed 20,000,000€
- Sales revenue exceeds 40,000,000€
- An average of 250 employees during the financial year
These companies must provide a comprehensive report, including a management report and often an audit.
Understanding where your company falls within these categories helps ensure you submit the correct type of report, avoiding unnecessary complications or penalties.
Why annual reports matter
Estonia takes corporate compliance seriously, and annual reports help ensure transparency in the business environment. They allow authorities, investors, and other stakeholders to assess your company’s financial health and performance.
Keeping up with reporting obligations also helps your company remain in good standing, making it easier to access banking services, attract investment, and enter into contracts with partners who may want assurance that your business is operating legally.
Beyond transparency, the annual report also plays an important role in tax and financial oversight. Estonia’s corporate tax system is highly attractive because profits are only taxed when distributed as dividends. However, even if your company does not owe any corporate tax, submitting an accurate report ensures that your financial records remain clear and compliant.
Does your company need an audit?
Not all companies in Estonia are required to have their annual reports audited, but some do, based on their size and financial activity.
Generally, an audit is required for businesses that meet at least TWO of the following conditions:
- Annual sales of 4,000,000€ or more
- A balance sheet of 2,000,000€ or more
- An average of 50 or more employees
Alternatively, an audit is required if a business meets at least ONE of these conditions:
- Annual sales of 12,000,000€ or more
- A balance sheet over 6,000,000€
- An average of 180 or more employees
Additionally, companies classified as large businesses or publicly traded must always have their financial statements audited. In some cases, smaller companies may also require an audit if they operate in specific industries, receive public funding, or have investor agreements that mandate it.
If an audit is required, the company must engage a licensed auditor, and the audited financial statements must be included in the annual report. The purpose of an audit is to ensure financial transparency and verify that the financial statements accurately reflect the company’s financial position.
Note: If you need an audit, we recommend starting your search for an auditor as soon as possible. The demand in Estonia is higher than the supply, making it difficult to secure an auditor in time.
When is the deadline for submitting the annual report?
The deadline for submitting an annual report is 6 months after the end of the financial year. For most companies in Estonia, the financial year follows the calendar year, meaning the annual report must be filed by June 30.
Reports can be submitted in Estonian and English (only the Estonian version is mandatory), and the entire process can be completed online via the Estonian Business Register, making it convenient for e-residents and remote entrepreneurs.
What happens if you miss the deadline?
Failing to submit your annual report on time can have serious consequences. For starters, you could face a fine of up to €3,200 – and you’d still have to submit the report after paying the penalty.
In the worst-case scenario, if your annual report remains unfiled, authorities may initiate compulsory liquidation proceedings, potentially leading to your company’s removal from the register. Just like that -poof!- your company could be gone.
On top of that, missing the deadline can cause unnecessary stress. Many entrepreneurs assume they can handle their annual reports at the last minute, only to realize they’re missing key financial data or facing technical issues with the submission system. As the deadline approaches, the system gets overloaded, making it harder to file smoothly.
The benefits of submitting your annual report early
The biggest advantage of submitting your report early? Peace of mind. Instead of scrambling at the last minute, you can ensure your financial records are accurate and complete, reducing the risk of errors or complications. Plus, you avoid potential fines.
Filing early also helps when dealing with banks, lenders, or investors who may request up-to-date financial statements before approving loans or investments. A well-organized, on-time report shows professionalism and reliability – an asset when negotiating deals or securing financing.
How to submit the annual report once it’s done
Once your annual report is prepared, the company’s management must approve, sign, and date it. If a board member has representation rights, only one signature is required.
If a required signatory doesn’t have an Estonian ID-card or e-Residency card, the report must be signed physically, then scanned and uploaded as a PDF.
If your company operates in a regulated industry, you must submit an activity license or activity notice with your annual report. This rule, introduced in 2015, ensures your documents are up to date and that you are legally allowed to operate in your industry.
Once all your documents are gathered, approved, signed, and ready, there are three ways to submit your report:
Non-residents (without e-Residency)
If you are a non-resident and do not have an e-Residency card, your annual report must be submitted via a notary, who will present the statement to the business registry.
If you’re interested in obtaining an Estonian e-Residency card, click here to learn more!
Estonian residents or e-residents
Estonian residents and e-residents with an e-Residency card can submit their annual reports electronically, provided they are board members or the sole shareholder of the company.
To do this, log into the Estonian Business Register using your ID card to access and submit your report.
Submit via an accountant
You can authorize an accountant to enter data and submit the annual report on your behalf. If you need assistance, we can help with this process.
Final thoughts
Annual reports are a key part of running a business in Estonia. While they may not be the most exciting part of entrepreneurship, staying compliant ensures your business remains in good standing and avoids unnecessary complications.
So, mark your calendar, get your financials in order, and submit your report on time. It’s a small but crucial step in keeping your business running smoothly.
How Incorporate can help
We can assist you with submitting this year’s or any previous annual reports. Get in touch, and we’ll ensure the process is smooth sailing. We also provide professional accounting and management support for Estonian businesses – so if you need help, we’ve got you covered!
