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Annual report for Estonian companies

The deadline for the annual report is right around the corner, on the 30th of June. It’s an obligatory process for all companies based in Estonia. If you are not familiar with how to prepare and submit the annual report then you can find detailed guidelines about the procedure here.

In short, the annual report gives an overview of the enterprise’s financial position and financial performance. The length and content of the annual report depends on the size of your enterprise.

Since 01.01.2016 enterprises have been divided into 4 categories
 
  • Micro enterprises
  • Small enterprises
  • Medium-sized enterprises
  • Large enterprises
     

For micro enterprises, the annual report consists of a balance sheet and an income statement whereas the report for small enterprises also contains the management report. Mandatory notes include accounting policies, labour costs and transactions with related parties. In addition, a micro enterprise, depending on one’s needs, may add up to three additional notes on the accounts. The respective choice for small enterprises is considerably larger. Lastly, the profit distribution proposal is added to  the end of the notes.

The annual report in the commercial register has less rows on the balance sheet for micro enterprises compared to small enterprises. The income statement is the same for both. As for accounting policies, micro enterprises are required to provide information on whether the enterprise is still operational. Notes on accounting policies and related transactions with parties both contain less information for micro enterprises compared to small enterprises.

The requirements for the annual report are different for micro and small enterprises that have been established during the second half of the financial year and who are planning to submit an annual report for a longer period than 12 months. In that case, similarly to medium-sized and large enterprises, the cash flow statement and the statement of change in owner’s equity must be presented in addition to the balance sheet and income statement.

The management report is a textual section in which an overview of the enterprises operations is provided in it’s entirety, as well as significant events which have occurred during the financial year and likely future developments. It’s worth to bear in mind that interested parties such as clients, competitors, potential or existing partners will all have access to the financial reporting. As a result, it’s advised to thoroughly think through on what shall be written in the report.

The annual report must be submitted within 6 months after the financial year has ended. Generally, the financial year is defined as a period between 01.01-31.12, which means that the deadline for submitting the annual report will fall on the 30th of June.

In recent years it’s become common practice for the registrar to issue a monetary fine without a warning if the annual report is not submitted on time or is not submitted at all. In case the annual report is not submitted within 6 months after the deadline has passed, supervision proceedings will be initiated which could end in the compulsory dissolution of the legal person.

The report can be submitted through Estonia’s company registration portal (https://www.rik.ee/en/company-registration-portal).

If you would like to make sure the annual report for your Estonian company is prepared and submitted properly then you can contact us via the form below.

Request your annual report here

By Richard J. Witismann on 7 April, 2019