ENUA
Ask an accountant
Guides · Glossary

Estonian company terms, in plain words

From OÜ and tax numbers to OSS: the words on every EMTA letter and Business Register screen, each in one to three sentences — with the source behind every rule.

· 10 min read · ·

A–Z

Terms by topic

A

Abridged annual accounts
Shorter accounts that micro and small undertakings following the Estonian Financial Reporting Standard may file: at least a balance sheet, an income statement and notes. A micro undertaking need not submit a management report. In the guide
Annual report (majandusaasta aruanne) 6 months
The yearly accounts an Estonian company files with the Business Register within 6 months of its financial year end, even after a year with no activity. Once filed, it is public. In the guide
Audit and review
An independent check of the annual accounts by a sworn auditor: an audit, or a lighter review, each required only above its own size thresholds in the Auditors Activities Act. In the guide

B

Basic exemption
The part of a person’s income that Estonian income tax leaves untaxed. The net salary calculator applies the current amount.
Business Register (äriregister)
Estonia’s register of companies. Annual reports are filed with it, and once filed they are public.

C

CFC (controlled foreign company) over 50%
A company abroad whose kept profit its owner’s country may tax before any of it is paid out. EU law requires every member state to apply such rules to a company holding more than 50% of a foreign entity that pays less than half the corporate tax it would pay at home. Rules for a person who owns a company are each country’s own.
Contact person (kontaktisik)
Required when an Estonian company’s address is abroad. Only a notary, an advocate or law firm owner, a sworn auditor or audit firm, a tax representative of a non-resident, or a licensed trust and company service provider may act. When the contact person’s term ends, a company left without one can be deleted after a warning. In the guide
Corporate income tax 22%
Estonia taxes company profit when it is distributed, not when it is earned: 0% while it stays in the company, 22% of the gross amount when it is paid out. In the guide

D

Deletion from the register
What can follow a missed annual report. No sooner than 3 months after the deadline, and after a warning with a final deadline, the registrar may delete a company that has no assets in the public registers, is not party to pending proceedings and has the consent of the authorities it consults. Otherwise the registrar can start compulsory dissolution, which a court decides. In the guide
DigiDoc
Estonia’s software for signing documents digitally and opening signed ones, used with an Estonian ID card or the e-Residency card. Under EU law a qualified electronic signature has the same legal effect as a handwritten one, in every member state.
Dividend
Profit an Estonian company pays its shareholders — by their resolution, on the basis of the approved annual report, and only if net assets in that report are not, and would not become, less than share capital plus the reserves that can’t be paid out. In the guide
Dormant company
A company with no business activity. In Estonia it still files its annual report every year. In the guide

E

e-Business Register
The online portal where an Estonian company is founded and where its annual report is approved and filed, with an ID-card, Smart-ID or Mobile-ID.
e-MTA
The e-services environment of the Tax and Customs Board (EMTA). A company submits its VAT returns there, and applies there for an EORI number.
e-Residency
A government-issued digital identity that lets you authenticate online, sign documents electronically and start an Estonian company fully online. It does not confer tax residency, citizenship or a right to live in Estonia. In the guide
EMI (electronic money institution)
A firm authorised to issue electronic money: what you pay in becomes electronic money, not a bank deposit. Under EU law the funds it receives are not deposits, and it must keep them safeguarded.
EMTA (Maksu- ja Tolliamet)
The Estonian Tax and Customs Board. A company registers for VAT with it and files forms TSD and KMD.
EMTAK
Estonia’s classification of economic activities. An OÜ names one main activity at founding; after that, the sales revenue by activity in its annual report decides which one is main. In the guide
EORI number
The EU number that identifies a business to customs. An Estonian company that imports, exports or moves goods in transit needs one, and applies for it in e-MTA.

F

FIE
A person registered in Estonia to do business in their own name, without a company. An FIE changes its field of activity by application; an OÜ changes it through its annual report.
Financial year (majandusaasta)
A company’s accounting year. The annual report deadline runs from its end, which isn’t always the end of the calendar year. In the guide
Form KMD by the 20th
The Estonian VAT return, filed and paid by the 20th of the month after the taxable period. A company registered in full files even for a period with no supplies and no input VAT; one registered with limited liability files only for a period in which it bought the listed services or goods from abroad. In the guide
Form TSD by the 10th
The monthly return for income tax, social tax, unemployment insurance, funded pension and the corporate income tax on distributions, filed and paid by the 10th of the following month. A company with none of the listed payments files no zero return, unless it has something else to report, such as a contribution to equity. In the guide
Fringe benefit
A benefit given in kind rather than as pay. An Estonian company declares it on form TSD and pays social tax on it as well as income tax. In the guide

H

Hidden profit distribution
A payment that takes profit out of an Estonian company without being called a dividend. A loan to a shareholder is taxed as one when its circumstances point that way, and the difference on a related-party deal off market price is taxed too. In the guide

I

II pillar (funded pension) 2%
A contribution withheld from the employee’s salary: 2% by default, and the employee may choose 2, 4 or 6%. In the guide
Income tax 22%
22% on a person’s income in Estonia. On a salary, the employer declares it on form TSD. In the guide
Intra-Community acquisition
Buying goods from a business in another EU country. Above €10,000 in a calendar year it obliges a company not registered for VAT to register with limited liability in Estonia; excise goods and new means of transport aren’t counted. In the guide
Intra-Community distance sales
Goods a business sends to consumers in another EU country. With telecom, broadcasting and electronic services to consumers, they count towards the EU-wide €10,000 threshold. In the guide
IOSS
The import scheme of the One Stop Shop. Unlike OSS, its returns are monthly. In the guide

K

KMD INF €1,000
The annex to the VAT return KMD, filed with it every month. It lists, partner by partner, the sales and purchase invoices whose total without VAT reaches €1,000 in the period.
KMKR number
An Estonian VAT number: the registration number a taxable person receives from EMTA, shown on its VAT invoices.

L

Legal address
The address an Estonian company has in the Business Register. It may be in Estonia or abroad; if it is abroad, the company must designate a contact person. In the guide

M

Management board (juhatus)
The directors of an Estonian company. The board approves the annual report, at least one member signs it, and the board files it with the register. In the guide
Management board member fee
What an Estonian company pays a member of its management board. It is declared on form TSD for the month it is paid. In the guide

O

OSS (One Stop Shop) €10,000
An optional EU scheme: one quarterly return, in the one country where you register, for the VAT due in other EU countries on sales to consumers. Above €10,000 of distance sales of goods and telecom, broadcasting and electronic services to consumers, this year or last, the customer’s country’s VAT applies to them, and OSS is the usual way to pay it. In the guide
OÜ (osaühing)
Estonia’s private limited company, the form most founders use. Each shareholder contributes at least €0.01 of share capital, and the company can be founded online in the e-Business Register for a state fee of €265.

P

Permanent establishment
A presence in another country that can make an Estonian company taxable there. Where one exists, EMTA says the tax treaty between the two countries decides. In the guide

R

Ratio 22/78
The same corporate income tax counted from the payout: the tax is the payout times 22/78, about 28.21% of it. In the guide
Record retention 7 years
Estonian companies keep source documents, accounting registers and other business documents for 7 years from the end of the financial year. In the guide
Resident company
Estonia treats a company founded under Estonian law as resident, wherever its owner lives. EMTA adds that it may also be taxed abroad when it is managed from abroad. In the guide
Reverse charge
The customer, not the supplier, accounts for the VAT. Between businesses in different EU countries it is the default for most services, and the invoice must say “reverse charge”. In the guide

S

Security tax
A tax on personal income and company profit that Estonia passed and then repealed before it ever applied. No security tax is charged on company profit. In the guide
Share capital (osakapital) from €0.01
What the shareholders put into an OÜ. There is no large minimum any more: each shareholder contributes at least €0.01.
Social tax 33%
33% that an Estonian employer pays on top of gross salary; it funds pension insurance and state health insurance. In the guide

T

Tax residency 183 days
Where a person is taxed as a resident. Estonia counts a person resident if their place of residence is there or they stay at least 183 days within 12 consecutive months; e-Residency counts towards neither. In the guide
Taxable person with limited liability
A limited VAT registration for a company that buys listed services from foreign businesses not registered in Estonia, or more than €10,000 of goods from other EU countries in a calendar year. It pays VAT on those purchases and can’t deduct input VAT. In the guide

U

Unemployment insurance 1.6% + 0.8%
1.6% withheld from the employee’s gross salary, and 0.8% paid by the employer on top. In the guide

V

VAT (käibemaks) 24%
Estonia’s value added tax: 24% as standard, reduced rates of 13% and 9%, and 0% for exports and intra-Community supply of goods. In the guide
VAT registration threshold €40,000
€40,000 of supply whose place of supply is Estonia, counted from the start of the calendar year: taxable sales including 0% sales, plus regular (not occasional) real-estate, insurance and financial income; transfers of fixed assets are left out. Cross it and the company applies within 3 working days. In the guide
VIES
The European Commission’s online check of EU VAT numbers.

Where these facts come from

Only official sources. Each line shows when we last checked it there.

This information is general in nature and current as of its publication date. It is not individual advice.

How we keep figures current

Rather have someone keep track of it all?

Monthly accounting

Monthly bookkeeping for your Estonian OÜ, all online: send us the month’s documents — we book them, match them to your bank and file every return on its date.

The guides

The questions behind these words, answered one by one — with every source.

A word on an EMTA letter you can’t place?

Send it to us as it is — an accountant explains what it means for your company, in writing.

Ask an accountant

We reply within one working day

Your cart

Test mode: no money is taken. We are checking payments — please do not place real orders yet.