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What is an Annual Report?
An annual report is mandatory for all accounting entities in Estonia and must comply with the legally prescribed format. The annual report consists of the financial statements and the management report. It must be submitted even if no economic activity has occurred.
The reporting period is the specified timeframe from which the financial statements for the past year are prepared. Typically, the reporting period is 12 months, but it can be longer or shorter under certain conditions, which will be discussed in detail in the following sections.
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Stages of Preparing an Annual Report
- Preparation of the financial statements
- Preparation of the management report
- Approval of the annual report
The financial statements include the main reports (balance sheet, income statement, cash flow statement, and statement of changes in equity) and the notes.
Classification of Companies According to the Accounting Act
| Category | Micro-companies | Small-companies | Medium sized companies | Big companies |
| Balance sheet | Up to 175 000 | Up to 4 000 000 | Up to 20 000 000 | Over 20 000 000 |
| Sales revenue | Up to 50 000 | Up to 8 000 000 | Up to 40 000 000 | Üle 40 000 000 |
| Number of employees | – | Up to 50 employees | Up to 250 employees | Over 250 employees |
The category changes if the company has been in a larger or smaller category for two consecutive years.
What must be submitted?
A micro-enterprise’s condensed annual report includes a short balance sheet, income statement, and notes. The following must be disclosed:
- The total amount of off-balance sheet contingent and binding liabilities.
- Liabilities for which guarantees have been provided, including descriptions of those guarantees.
- Advances and loans paid to management, including the terms of these loans.
If the company has acquired or taken its own shares as collateral during the year, it must provide:
- The number of shares and their nominal value or proportion of capital.
- The amount paid for the shares and the reason for acquisition or taking them as collateral.
A micro-enterprise does not need to prepare a management report. However, it can opt to prepare either the condensed report for small enterprises or the full annual report. The financial statements must be prepared in Estonian and in the official currency of Estonia, specifying the level of precision used (e.g., euros, millions of euros).
A small enterprise’s condensed annual report is prepared according to the Estonian Financial Reporting Standard and includes two main reports: the balance sheet and income statement, along with notes. In addition, a management report must be prepared.
Medium-sized and large enterprises must prepare a full annual report, including the management report, four main reports (balance sheet, income statement, cash flow statement, and statement of changes in equity), and notes. A full report is also required from non-profit organizations and foundations.
You can read more about annual report from Eesti.ee.
Read our article about Failure to submit the annual report in Estonia.
Preparing the annual report
Preparation principles for financial statements
- The company’s assets, liabilities, and transactions are accounted for separately from those of owners, creditors, employees, and clients
- It is assumed that the company operates continuously with no intention of cessation.
- Disclosed information must be clear, understandable, and include all significant details affecting financial position, performance, and cash flows.
- Consistent accounting policies and presentation methods must be used.
- Revenues are matched with corresponding expenses; information must be neutral and reliable.
- Reports must avoid overstatement of assets and income and understatement of liabilities and expenses.
- Transactions are recorded based on their substance rather than merely their legal form
The content and requirements of the report depend on the type and category of the company, according to the Estonian Financial Reporting Standards. Micro and small enterprises can prepare either a condensed report (balance sheet, income statement, and notes) or a full report.
You can find useful information for preparing the annual report here.
Submission of the annual report
The annual report must be submitted to the commercial register no later than six months after the end of the financial year. The report can be submitted electronically via the e-Business Register.
When submitting the report, all licenses and notifications registered under your company will be displayed, and you must confirm that you have fulfilled the legal notification obligations or that these obligations do not exist. Before confirming the data, check the information in the Business Activity Register and ensure its accuracy. If there are inaccuracies, submit a notification to correct the data.
You can read about submitting additional information in the help information of the e-business register.