Tips for submitting your annual report correctly and on time during the COVID-19 lockdown
Editor’s note (15 May 2020): due to COVID-19, the due date of company annual reports has been extended until 31 October 2020. Some changes to the original text of this blog post have therefore been made to take into account this update.
IMPORTANT REMINDER FOR E-RESIDENTS WITH ESTONIAN COMPANIES!
Your company’s 2019 Annual Report is due on 31 October (if you follow the standard financial calendar year from 1 January to 31 December).
We are aware of some e-residents whose digital ID cards will expire before you submit the annual report and, due to the COVID-19 crisis, you cannot pick up your new card (meaning you will not be able to digitally sign the report in the usual way, which is required to submit it).
This article contains information about alternate methods of submitting your annual report correctly and on time during the crisis.
What is the annual report?
Compiling an annual report is mandatory for all Estonian companies under the Commercial Code (see § 60), even if the company doesn’t have any activities during the financial year. It has to be prepared in Estonian and in the official currency (EUR).
This rule is enforced by the Estonian Tax and Customs Board and delays in submitting the annual report on time may result in penalties or eventually deleting the company from the Business Register. E-Residency anticipates stricter enforcement by the Tax Board of the requirement for annual reports and therefore encourages all e-residents with companies to submit their annual reports on time and in accordance with the law.
For larger companies, the annual report must contain the annual accounts (balance sheet, income statement, cash flow report and statement of changes in equity, plus annexes) and management report. However, the vast majority of e-residents’ companies will most likely fall within the definition of a micro-enterprise and therefore only need to submit an abridged annual report. A micro-enterprise is a private limited company or Osaühing („OÜ“) complying with all the criteria described below:
- total assets do not exceed EUR 175,000;
- revenue does not exceed EUR 50,000;
- total liabilities do not exceed total equity; and
- one shareholder who also acts as a member of the Management Board.
For micro-enterprises, only two basic reports must be added to the annual accounts (balance sheet and income statement plus up to three annexes). Compiling a management report is not necessary.
It is also important in completing your financial statements to follow local standards, including the ‘Good Accounting Practices’ and the guidelines issued by the Accounting Board. As most of you are running a small or medium-sized company, it is recommended to prepare financial statements using Estonian financial reporting standards (local GAAP), but you can also use IFRS as adopted by the EU.
Read more about Accounting for an Estonian company on the e-Residency Knowledge Base or download our full Business Guide for e-residents.
When is the Annual Report due?
The annual report is normally due within six months after the end of the financial year. The financial year in Estonia is 12 months long and usually coincides with the calendar year, meaning that it starts on 1 January and ends on 31 December (although it is possible to change it to any 12 month period).
This means that annual reports are due by 30 June each year for companies following the standard financial calendar year.
Please note that this year the Estonian Tax and Customs Board have extended the due date to 31 October 2020 due to the COVID-19 crisis.
How do I submit my annual report?
Generally, we recommend e-residents to use a service provider for accounting purposes, in which case they will help you to prepare and submit the annual report. You can find a list of helpful service providers at our e-Residency Marketplace:
If you decide to submit the annual report yourself, you must do so online at the e-reporting environment of the Company Registration Portal. The portal has been established for electronic submitting of annual reports; its use requires logging in with your digital ID card or SmartID.
You can file your annual report in XBRL format and either sign it digitally using your digital ID card and your relevant PIN or by printing the report, signing it by hand, and uploading the scanned file to the portal.
My e-Residency card is expiring and I can’t collect the new one due to COVID
We know that there are some of you whose e-Residency card is expiring soon and you are not able to collect the new one due to COVID-19. So how to submit the report without your card?
If you use a service provider for accounting purposes, they can help you to prepare and submit the annual report. You’ll need to grant them power of attorney in the portal to sign on your behalf before your card expires. An accountant can submit the annual report on your behalf only if you as a board member of your company have granted such power in the portal. The respective power of attorney must be submitted with the annual report.
However, if you decide to submit the annual report by yourself, there is another option: using SmartID, and signing the report the old-fashioned way — by printing, signing by hand, and uploading the scanned file to the Company Registration Portal.
Before your e-Residency digital ID card expires, you will need to download and set up the Smart-ID app. This app does not depend upon the expiration date of your card but in order to apply SmartID you need to have a valid e-Residency digital ID.
If you use SmartID, you will be able to continue using some Estonian e-services, including the Company Registration Portal, at least until the situation becomes safe enough to pick up your new card.
Please note that Smart-ID is a product provided by SK ID Solutions, which is an organisation independent from the Estonian Government. E-Residency has no responsibility if some government services are not available or do not work with SmartID. Please direct any support queries directly to SmartID in this instance.
What are the steps to submit my hand-signed annual report with SmartID?
In order to submit a hand-signed annual report, please login to the Company Registration Portal via SmartID.
After you fill out the report, the system will ask you to choose the signing method. Since you are not able to sign the annual report digitally (because your card has expired), select the alternative option — printing out
a paper version of the report, signing it by hand, scanning the entire report and re-uploading it to the system as a PDF file.
Here are the detailed steps:
- Once you have filled out all necessary information, you will be asked to approve your report. The system will provide you with two options for the type of document to be uploaded. Please choose “Upload the entire scanned paper report” from the dropdown menu.
- At this point, you will need to print out the final version of the report generated in the system and sign it by hand. Don’t forget to mark the date of report completion on the signature sheet.
- Scan the entire report and upload the scanned file into the system in PDF format. Once it’s uploaded, specify whether the scanned report includes signatures of all board members or only some of them. You will also need to select the type of audit (if applicable for your company) and click “Save” then enter the date of report completion in the appropriate box and click “Save” again.
- Finally, validate the report by clicking “Add my confirmation”. A pop-up window will open where you will need to enter your role in the company (for example, a board member). If you wish, you can also add comments. Then click “Confirm the report”. NB: The report only needs to be approved by one person related to the company.
Please note that if you want to change the report after the confirmation, you must cancel the confirmation, delete the previously uploaded report and start from the beginning.
Help: my e-Residency card has already expired!
If your e-Residency digital ID card has already expired and you have not either already logged into SmartID or granted your service provider a power of attorney in the portal, the situation is more difficult and will depend on your specific circumstances.
In the first instance, we recommend checking with your service provider to see if they can offer a solution. Otherwise, please contact our support team and we will look into your specific situation to see if there is anything you can do.