A branch of a foreign company does not constitute a legal entity and the foreign company is liable for the activities and obligations of the branch. However, relatively similar rules are applicable for the reporting of branches compared to other forms of companies under Estonian law, except in the submission of the annual report.
Branch accounting and reporting
As the head of a branch, you have, among other things, the obligation to organise the accounting of the branch in accordance with the requirements of the Accounting Act. As the representative of the branch, you must submit:
- an annual report to the Tax and Customs Board every year;
- an annual report of a foreign company to the commercial register every year;
- annual tax reports depending on the taxes paid by the branch;
- reports arising from the field of activity if the branch operates in a field of activity with special requirements;
- reports to the Estonia if the branch is included in the sample of statistical surveys;
- official entries in the health insurance fund if the branch has employees for whom social tax is paid.
Submission of an annual report
The head of a branch of a foreign company must submit the approved annual report of the company in one of the official languages of the European Union to the commercial register within one month as of the approval of the annual report of the company or within seven months as of the end of the financial year.
If a foreign company is not required to disclose the annual report, the annual report prepared for the branch and signed by the head of the branch must be submitted to the commercial register. The requirement to prepare and submit the annual report of a branch is not applied to a company of a Contracting State of the European Economic Area, the annual report of which is not required to be disclosed under the legislation of the country of location.
Pursuant to the Income Tax Act, the branch must submit a signed copy of the annual report to the Tax and Customs Board within six months after the end of the financial year.
The annual report can be sent to the Tax and Customs Board at the email addresses emta@emta or [email protected] or uploaded as a file in the e-MTA environment.
The annual report of a foreign company must be prepared in accordance with the rules of its country of location. The report must be submitted to the commercial register via the e-commercial register in PDF format as a scan of the paper report and must contain all the necessary signatures.
You can also submit the report to the commercial register through a notary. The signed report must be submitted to the notary either on paper or in electronic form. The notary will submit the report to the commercial register on your behalf. A notary fee must be paid for this.
Tax reporting
If a branch pays business-related taxes to the Estonian state, you must also file a tax return for the relevant type of tax. For instance, if the annual turnover of a branch exceeds 40,000 euros and the branch is registered as a VAT payer, you must file a value added tax return to the Estonian Tax and Customs Board by the 20th day of each month. Taxes also subject to reporting requirements include income tax, social tax, unemployment insurance tax, excise duty and environmental charges. The Estonian Tax and Customs Board has established specific dates when the reports are due.
The deadlines for submitting the reports are available in the tax calendar on the website of the Estonian Tax and Customs Board.
Sector-dependent reporting
If special requirements apply to the sector of a branch or it is associated with an additional tax burden (for example a provider of medical services, vendor of goods subject to excise duties, etc.), you must submit additional reports.
Submission of data to Statistics Estonia
You can check whether your company or organisation must submit data to Statistics Estonia, on the website of Statistics Estonia from the section "Submit data – Obligation to submit data“. If you do not have an ID-card, you can apply for password-based data submission rights from Statistics Estonia by filing an application on the Statistics Estonia website as follows: click on the link "View other authentication options – Register as a user".
Forwarding the data of a certificate of incapacity for work to the Health Insurance Fund
Electronic certificates of incapacity for work are used in Estonia. Electronically adding data to the certificate of incapacity for work is mandatory for employers.
Registration of employees
As an employer, a branch is subject to the requirement to register its contracted employees in the employment register.
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