ANNUAL REPORT

An annual report is a document that provides an overview of a company’s financial results and business activities during a specific reporting period.

It is mandatory for all companies registered in Estonia, regardless of their size, industry, or level of activity. The report must be submitted even if the company has been inactive or “on pause” during the year.

The purpose of the annual report is to provide a clear and transparent overview for company owners, business partners, and the state.

The annual report must be submitted no later than six months after the end of the financial year. For example, if a company’s financial year ends on 31 December, the submission deadline is 30 June.

Meeting the deadline is important, as failure to submit the annual report may result in a warning, a penalty payment, or even removal of the company from the Commercial Register. Many businesses plan the preparation and submission of their annual reports for the spring to ensure everything is completed on time.

An annual report contains a company’s key financial figures and a brief overview of its activities. It typically outlines the company’s income, expenses, profit or loss, overall financial position, and an overview of its liabilities.

Where required, the report may also include a management commentary, which helps explain what the company did during the financial year.

The main components of an annual report are:

• Balance Sheet – shows the company’s assets and liabilities as of a specific date.
• Income Statement (Profit and Loss Statement – provides an overview of income and expenses, showing whether the company made a profit or a loss.
• Cash Flow Statement – reflects the movement of cash into and out of the company. This is generally required for larger companies.
• Statement of Changes in Equity – shows how the company’s equity changed during the reporting period.
• Notes to the Accounts – explain the figures in the report and the accounting principles applied.

Management Report – describes the company’s performance, objectives, risks, and future development plans. Micro-entities are not required to submit a management report.

The annual report is submitted electronically via the Commercial Register portal (https://ariregister.rik.ee). The report must be submitted by a person authorised to represent the company or by an authorised representative who has an Estonian ID card or another approved authentication method. After logging in, the required information must be entered, the report documents uploaded, and the submission digitally confirmed.

If the report is prepared by an accountant, the company’s management is still responsible for approving and submitting the report. Submitting the annual report is free of charge; however, submitting incorrect or misleading information may result in penalties.

Responsibility for the annual report lies with the company’s management board. Even if the report is prepared by an accountant or an external service provider, the management board must review, approve, and submit it on time.

The accountant’s role is technical—preparing the report in accordance with the Accounting Act and the Estonian Financial Reporting Standard. However, the final responsibility always remains with the management board.

Yes, it does. If a company has not been active during the financial year, an annual report must still be submitted showing that the company had no transactions, income, or expenses. Even in the case of a loss, submitting the annual report for the respective year is mandatory.

Many business owners mistakenly believe that inactive companies do not need to file an annual report, but in fact this obligation applies to all companies registered in the Commercial Register.

If an annual report is not submitted, the Commercial Register will first send a reminder to the management board, followed by an official warning. If the company still fails to submit the report, a penalty payment or fine may be imposed. The fine can be up to EUR 3,200 and may be imposed repeatedly.
Please note: A deletion warning does not exclude the imposition of a fine, including repeated fines.

Ultimately, the company may be removed from the Commercial Register, especially in cases of prolonged non-compliance. In addition to legal consequences, this can negatively affect the company’s reputation and credibility—particularly in the eyes of business partners, banks, and public authorities.

Yes, it can. If errors are identified in an annual report, a corrected report may be submitted. In such cases, the changes must be clearly indicated, along with an explanation of why the corrections were made. The corrected report replaces the previous one and is published in the Commercial Register in the same way as the original report.

Accurate and transparent reporting helps maintain a company’s credibility. If you need professional assistance with preparing or submitting an annual report, the Purgato team is ready to support you.