Key Features of Accounting in Estonia

Digitalization:
Estonia is a global leader in digital transformation, and its accounting processes are no exception. Most tax declarations, financial reporting, and communication with authorities are done through user-friendly online systems.

Corporate Tax Structure:

• Estonia’s corporate tax rate is unique: 0% tax on reinvested or retained profits.
• A flat 20% tax rate applies only to distributed profits (e.g., dividends).

Mandatory Financial Reporting:
Companies are required to maintain accurate financial records and submit annual reports to the Commercial Register. The fiscal year typically aligns with the calendar year (January 1 – December 31).

Important Dates for Businesses in Estonia

Annual Report Submission:

• Deadline: June 30 of the following year.
• All Estonian companies must submit their annual financial reports through the Commercial Register.

Monthly VAT Declarations:

• Due: 20th of each month.
• Businesses registered for VAT must file their declarations and pay any applicable VAT by this date.

Salary Tax Declarations:

• Due: 10th of each month.
• Employers must declare and pay income taxes, social security contributions, and unemployment insurance premiums for their employees.

VAT in Estonia

The standard VAT rate is 22%.

A reduced VAT rate of 9% applies to specific goods and services, such as books, medicine, and accommodation services.

Businesses with an annual turnover exceeding €40,000 are required to register for VAT.

Key Considerations for Compliance

Accurate Bookkeeping:
All companies in Estonia are required to maintain detailed and accurate financial records in compliance with the Estonian Accounting Act.

E-Residency and Accounting:
If you’re an e-resident managing a company in Estonia, you can easily handle your accounting obligations through Estonia’s digital systems. This includes submitting reports and paying taxes from anywhere in the world.

Audit Requirements:

Medium and large companies may require an audit if they meet specific thresholds for revenue, assets, or employee numbers.

Small companies are generally exempt from audit requirements.

Why Proper Accounting Matters

Ensuring compliance with Estonian accounting laws is essential to avoid penalties and maintain a good reputation. Accurate accounting also provides insights into your company’s performance and helps in making informed business decisions.

Conclusion

Estonia’s streamlined accounting system, supported by its digital infrastructure, makes compliance straightforward for businesses. However, staying on top of important dates, tax rates, and reporting obligations is critical.

At Rozenberg Partners, we specialize in providing accurate and efficient accounting services tailored to your business needs. Contact us today to ensure your company’s financial management in Estonia is in expert hands!