In accordance with § 179 of the Commercial Code of the Republic of Estonia, every enterprise registered in Estonia is obliged to submit a financial annual report regarding the results of its business activities within 6 months from the date of closing the business year. This means that for most Estonian companies (whose business year is identical to the calendar year), the deadline for submission of the annual financial statements to the regulatory authorities comes on June 30 of each year.
However, there is one exception for newly established Estonian companies. So, if the enterprise was registered in the second half of the year (from July 1 to December 31), such a company has the right not to submit financial statements for the split year separately and submit it together with the annual report for the next year.
Besides it is important to emphasize that absence of any business activity of the Estonian company in no way affects the deadlines of preparation of financial statements and will not cancel the obligation to submit the annual report to the Commercial Register – in this case, it is required to submit a zero annual report.
Data on whether the Estonian company has submitted the annual report or not, as well as whether the designated financial statements have been provided within the established deadlines, are recorded by the Commercial Register and are publicly available information, as well as the content of the company’s annual report itself – any person concerned or potential partner can acquaint himself and draw conclusions concerning correctness and timeliness of fulfilling requirements for submission of the annual statements by your enterprise.
Did you not submit the annual report on time? Possible consequences:
It should be admitted that until now, the situations when Estonian companies exceeded the deadline for submission of the annual statements or even abused their obligation to submit financial statements were quite frequent. However, the new Law on the Commercial Register (est. Äriregistri seadus or ÄRS) came into effect on 01.02.2023 provided the supervisory authorities with additional opportunities and leverage on the entrepreneurs to provide correct fulfillment of the obligation regarding providing financial statements by the companies registered in Estonia.
If submission of the annual report is delayed for several months, then, usually, no negative consequences arise for the company. However, in case of delay in submitting financial statements for a longer period, the Commercial Register of Estonia will issue:
Warning of fine
First of all, the Commercial Register warns the enterprise and gives additional deadline (usually 30 days) to settle down situation and submit the annual report in accordance with all the requirements. If the resolution is correctly executed and the report is submitted, the situation will be covered.
If the annual report is not submitted within the additional deadlines established by the resolution of the Commercial Register, the supervisory authority has the right to impose a fine on the enterprise. The fine amount will depend on the specific circumstances, but it can reach EUR 3,200. It should be noted that fine payment will not release from the obligation to submit statements, in connection with which the fine can be imposed repeatedly.
Fine of a company board member
The Law allows, in addition to the company itself (legal entity), to impose fine on specific individuals (usually the company board members) as well who are responsible for timely submission of the financial statements.
Warning of company removal
If the company ignored the warnings made earlier to its address, the supervisory authority has the right to make warning to the enterprise regrading forced removal of the company from the Register and designate the specific deadline (usually 6 months) during which the statements should be submitted – otherwise the Commercial Register will begin the procedure for the forced removal of the company.
Forced company removal
In case when all the measures previously indicated have not had any effect and the company has not submitted the annual financial statements within all the additional deadlines, the Commercial Register has the right for force removal of the company.
In conclusion, it should be noted that the general public and potential partners of your enterprise will have access to information about all the warnings and fine measures taken against the company. Due to the circumstances described above, we recommend that you treat the obligation to submit the annual statements of your Estonian company with due diligence and submit annual financial reports to the Commercial Register timely.
If you need to prepare annual financial statements for your Estonian company, feel free to contact our accountants and consultants! Our specialists will prepare the annual report for your company in the shortest possible time!
You can find additional information about the other accounting services on the subject page of our website.