Month one
- Accounting obligation starts on the date of registration. There is no grace period and no minimum size below which it does not apply.
- Set up a document flow before the first invoice, not after the fiftieth.
- Confirm the contact person and legal address requirement if no board member resides in Estonia.
- Open a business bank or payment account. Expect to explain what the business does, where the customers are and where you are personally located.
When VAT becomes a question
You must register for VAT once taxable turnover exceeds €40,000 in a calendar year, and within three working days of crossing that point. But there are earlier triggers that catch new companies: buying services from suppliers in other countries, and acquiring goods from other member states, can create an obligation regardless of turnover.
Voluntary registration is worth considering from the start if you sell to businesses. If you sell to consumers, it makes you 24% more expensive, so the threshold is a real decision point rather than a formality.
If you pay yourself
The moment the company pays you a board member fee or a salary, monthly payroll obligations begin: the TSD declaration by the 10th of the following month, social tax at 33%, and - for salary - unemployment insurance. If you live outside Estonia, the treatment of that payment depends on your country of residence and the applicable double tax treaty, and it belongs on the correct TSD annex.
The cross-border questions to settle early
- Where are you personally tax resident, and does that country tax your worldwide income?
- Where is the company effectively managed from? If that is your kitchen table in another country, that country may claim the company is tax resident there.
- Does your activity abroad create a permanent establishment? Concluding contracts, having a fixed place of business, or employing people locally are the usual indicators.
- Does your country have controlled foreign company rules that tax undistributed Estonian profit in your hands anyway?
These are not exotic questions and they are much cheaper to answer in month two than in year four when another tax authority asks them first.
The annual report
The first financial year may be longer or shorter than twelve months depending on the registration date and the year end you chose. The report is due within six months of the financial year end - 30 June for a calendar year - and is mandatory even if the company did nothing at all.
A realistic first-year calendar
- Monthly, by the 10th: TSD, if you paid anyone.
- Monthly, by the 20th: KMD and KMD INF, if VAT registered.
- Quarterly: OSS return, if you sell across the EU to consumers above the threshold.
- Annually, by 30 June: annual report for the previous financial year.
- Annually, from 16 February: your personal Estonian income tax return, if you are an Estonian resident.
The three most common first-year mistakes
- Assuming no activity means no obligations. It does not, and the annual report is filed either way.
- Running personal costs through the company. In Estonia these are not merely non-deductible - they can be taxed as distributions at 22/78.
- Waiting until year end to set up bookkeeping. Reconstructing twelve months of records from bank exports costs several times what doing it monthly would have.
Frequently asked questions
When do accounting obligations start for a new Estonian company?
On the date of registration. There is no grace period, and the obligation applies regardless of turnover.
Do I need to visit Estonia in the first year?
No. Registration, banking with an EMI, declarations and the annual report can all be completed remotely with an e-Residency card.
What if my company had no activity at all in its first year?
You still file an annual report by the deadline. It will be short and inexpensive, but it is not optional.
General information, not tax advice
This article reflects Estonian law as it stands on the date shown. Rules change and individual circumstances differ - confirm your own position with us before acting.