Estonian private limited companies (OÜ)
Although Estonia has a very simple system when it comes to incorporating, running, taxing and closing a company there are still a number of regulations you need to take into account. We regularly remind our clients about fulfilling their bookkeeping and declaration duties, however, it makes sense to get familiar with the main regulations yourself as well.
The private limited company, („osaühing “or „OÜ“ in Estonian) is the most common form of business in Estonia.
An Estonian private limited company („osaühing “or „OÜ“ in Estonian) needs at least one shareholder and one director.
The minimum share capital is 2500 EUR, but there is no obligation to deposit it
An Estonian can be fully (100%) foreign owned
Taxation and main declarations
Taxation period in Estonia is one month, FICA declaration should be submitted by the 10th date of next month and VAT and VD declarations deadline is 20th date of next month (for example accounting documents by August will be declared in Sept)
Learn more about taxation in Estonia >
Accounting
All business transactions recorded in the company accounts must be documented with accounting documents and related to the activity of the company. The Accounting Act sets a number of formal requirements to accounting source documents. Accounting documents are all invoices, checks, purchases, contracts, bank statements, business trip reports with expenses, agreements etc All transactions in the accounts of the company must be related to the economic activity of the company and should be sent to service provider.
Accounting documents
Accounting documents are all invoices, checks, purchases, contracts, bank statements, business trip reports with expenses, agreements etc All transactions in the accounts of the company must be related to the economic activity of the company and should be sent to service provider.
Financial reporting obligations
At the end of each financial year, an accounting entity is required to prepare an annual report consisting of the financial statements (balance sheet, income statement, cash flow statement and statement of changes in owner’s equity and notes on the accounts), the management report, the auditor’s report (if an audit is required) and the profit distribution proposal or proposal on covering of loss for the financial year.
Commercial Register
Every company must prepare and submit an annual report to the Commercial Register. Annual reports must be filled with the register even if the company had no transactions in the financial year. A penalty can be charged if an annual report is submitted late. The approved annual report must be submitted to the Commercial Register within six months of the end of the financial year.
Exceptions for branches of foreign companies
Branches of foreign companies need not prepare annual reports. Instead, an unattested copy of the audited and approved annual report of the company is submitted to the Commercial Register of the location of the branch no later than one month after approval of the annual report or seven months after the end of the financial year.
Financial year
A company’s financial year is 12 months long. A financial year generally coincides with the calendar year (1 January - 31 December), but a company’s articles of association may specify a different financial year.
Accounting principles
According to the Act, commercial undertakings may choose whether to prepare their annual financial statements according to Estonian Accounting Standards (Estonian GAAP) or IFRS. Listed companies, credit institutions and insurance companies are required to follow IFRS.
The Estonian Accounting Standards are issued by the Accounting Standards Board which acts under the supervision of the Ministry of Finance.
Accounting Reports
The main financial documents in Estonia are the balance sheet, the profit and loss account and the cash flow statement.
The Accounting Act sets a number of formal requirements to accounting source documents. Each entity has to prepare its internal regulations on accounting and the chart of accounts.
Accounting registers can be maintained as hard or electronic copies. The annual statements should be prepared in Estonian language and must be signed by the management board.
More about:
● Taxation of profits in Estonia
● Taxation of income for non-residents