The dissolution process of a sole proprietor is simple and quick compared to companies. If you would like to terminate your activities as a sole proprietor, you must submit an application for the termination of the activities and deletion from the register to the registrar of the Business Register. A sole proprietor is deleted from the Business Register on the basis of their application.
A sole proprietor who is a person liable to value added tax must first apply for deletion from the national VAT register of the Estonian Tax and Customs Board before submitting the aforementioned application to the Business Register.
Payment of taxes and transferring assets into personal use
In order to transfer assets used in business activities into personal use, you must first pay all the required taxes and settle any obligations. The most important taxes that require your attention when terminating your business activity are income tax, social tax, and VAT.
Before you can be deleted from the VAT register, you must first pay the VAT on unsold goods if you deducted the input VAT upon acquisition, provided you are liable to pay VAT. The taxable value of goods is its acquisition cost, or in its absence, its cost price. After the termination of economic activity and the settlement of any obligations or taxes, you have the right to transfer assets into personal use. Upon dissolving a sole proprietor, the market price of assets, the acquisition cost of which you recognised as a business expense, is considered business income. You are liable to pay company taxes on business income when dissolving. Going forward, assets transferred into personal use will be used by you and the members of your family for personal interests or by third parties whom you allow to use the assets.
Deleting a sole proprietor from the business register
If you as a sole proprietor have fulfilled all of your obligations, you can submit an application for deletion from the business register to the registrar. The most convenient way for submitting an application for deletion is electronically through the e-Business Register. For this, you will need Mobile-ID or an ID card and the means for adding your digital signature.
The final calculations on tax obligations are presented in an income tax return. Income tax return form E must be submitted to the Estonian Tax and Customs Board by 30 April of the year following the year of dissolution.
For more information about the rights and obligations of a sole proprietor upon the suspension and dissolution of business activities, please visit the website of the Tax and Customs Board.