Estonian accounting for Swedish companies

Who this page is for

We work for Swedish companies with real business in Estonia. That is usually the case when:

• your Swedish company has a subsidiary in Estonia with its own staff, premises or customers,
• the Estonian company is VAT-registered and files a VAT return (KMD) every month,
• the board or managers in Estonia take the decisions there,
• you employ people in Estonia and need payroll under Estonian law.

In those cases you need Estonian books, Estonian filings on time and someone who understands both countries. That is what we do.

Who this page is not for

An Estonian company rarely helps an owner who lives in Sweden, runs the company from Sweden and sells to Swedish customers. The business, the decisions and the owner's own tax all stay in Sweden, so the Estonian rate seldom makes a difference. The same applies if the only reason for the company is 0% tax on profit that stays in it.

How do the Swedish CFC rules treat Estonia?

Estonia's 0% on retained profit is below the Swedish low-tax threshold, which is 11.33% for 2026. The threshold comes from the Swedish rules on controlled foreign companies (CFC rules), in chapter 39 a of the Income Tax Act (inkomstskattelagen). In plain terms, these rules can tax a Swedish owner on the profits of a low-taxed foreign company. Under the main rule, foreign income counts as low-taxed if the tax on it is below 55% of the Swedish corporate tax rate of 20.6%.

There is also a complementary rule in 39 a kap. 7 §, with a list in bilaga 39 a, the annex to the Act. Estonia is on that list, in the European section. That is a better starting point than a German group with an Estonian subsidiary has. For an ordinary trading or services company in Estonia, there is good reason to take the question further.

Two things the list does not settle

1. The carve-out. The listing of Estonia does not cover income from banking and financing business, other financial activity, insurance, royalties and other income from intellectual property. If the Estonian company earns licence or financial income, the listing does not protect it.
2. Liability to tax. The complementary rule requires the company to be resident and liable to tax in the listed country. Estonia defers tax on retained profit until the profit is distributed. So it is unclear whether the listing helps a company that has not distributed profit. That is the question to put to your Swedish adviser.

Questions for your Swedish adviser

• What income does the Estonian company earn, and does any of it fall under the carve-out for financial, royalty or intellectual property income?
• Does the listing of Estonia help a company that has not distributed profit, given that the complementary rule requires it to be liable to tax?
• Can an Estonian company that is in practice managed from Sweden become liable to tax in Sweden?
• How is a dividend from the Estonian subsidiary treated at the parent?

Sweden treats a company as resident if it is registered or incorporated in Sweden. How Swedish rules treat a foreign company whose board or management sits in Sweden is one of the questions above.

How we work with your accountant

We handle the day-to-day bookkeeping, the Estonian VAT return, payroll and the annual report. Before the first month, we agree the chart of accounts, the reporting format and the dates with your Swedish accountant. We deliver figures in euro, and your Swedish accounts team translates them into kronor.

Each month we reconcile items between the Estonian company and the rest of the group, such as loans, services and dividends. Your Swedish accountant can then make the group eliminations without chasing explanations later. Eliminations simply remove transactions between group companies from the group totals.

What we need to get started

• The Estonian company's register code and latest annual report, if the company already exists.
• Bank statements from the Estonian accounts, plus purchase and sales invoices.
• Agreements between the Estonian company and the rest of the group, especially for loans, services and distributions.
• Payroll data and employment contracts, if there are staff in Estonia.
• Contact details for your Swedish accountant and the group reporting calendar.

Once we have these, we tell you what needs doing in Estonia, in what order and how much work it is each month. If some periods have not been booked, we first agree how to deal with them. If it turns out that an Estonian company adds nothing in your case, we tell you before we take on the work.

Two pages with more detail

The pages below cover the Estonian subsidiary in more detail, including bilaga 39 a and the calendar, and payroll for staff in Estonia.