Monthly Accounting for E-residents

The Estonian OÜ pays tax in Estonia — but only when distributing profits. On the €80,000 retained in the OÜ: 0% Estonian corporate tax until distributed. When you distribute dividends: OÜ pays 20% Estonian distribution tax. You receive the net dividend. In Germany: you declare the dividend income on your German tax return. Germany applies the Estonia-Germany DTT, under which the Estonian 20% distribution tax is creditable against German dividend tax. Germany’s dividend income is taxed at approximately 26.375% (Abgeltungsteuer). Since Estonian 20% < German 26.375%, you would typically owe the difference (approximately 6.375%) to German tax authorities. The exact calculation depends on your specific situation and any applicable deductions — consult a German Steuerberater for your personal position.

This is a serious compliance situation that needs to be addressed promptly, not ignored. EMTA does not automatically audit inactive or non-filing OÜs immediately, but the risk of detection increases over time, and penalties (0.06%/day on any unpaid tax, plus filing fines) accumulate. The correct approach: (1) engage an accountant immediately to reconstruct the accounting for all three years from bank statements, invoices, and any available records; (2) file the outstanding annual reports with the Business Register for each year; (3) file any outstanding KMD returns (if the OÜ was VAT-registered or should have been); (4) file any outstanding TSD declarations (if the OÜ paid any salary or board fees); (5) consider making a voluntary disclosure (vabatahtlik parandus) to EMTA to regularise the situation — EMTA treats voluntary correction more favourably than discovered non-compliance. The cost of back-filing is real but far less than the cost of EMTA enforcement.

Your existing e-ID card can no longer be used for digital signing or e-Tax portal authentication once expired. However, you can renew your e-residency card at an Estonian embassy or diplomatic service location near you — you do not need to visit Estonia for the renewal. During the renewal period, your accountant can continue managing EMTA filings via the esindusõigus delegation that was already granted — the delegation remains active regardless of your ID card expiry (the delegation belongs to the OÜ record in EMTA, not to your ID card validity). For signing annual reports and board resolutions during the renewal period: you can use a notarised power of attorney if needed, or time annual signatures around card renewal. Renewing proactively (at least 2 months before expiry) prevents any gap in access.

The OÜ can invoice any clients worldwide — the accounting and VAT treatment follows the rules outlined in Section 3. The separate question is whether invoicing clients from your home country via an Estonian OÜ creates any issues in your home country. Most countries respect that an Estonian OÜ is a genuine legal entity and that invoices from it are valid business transactions. The potential complication: if you are the sole owner and the sole person performing the work, and if your home country’s tax authority views the OÜ as a ‘controlled foreign corporation’ (CFC) or as your personal business conducted through a foreign shell, they may assess the OÜ’s income as your personal income and tax it at personal rates. CFC rules vary significantly by country — Germany, Finland, and some other EU countries have active CFC regimes. A UAE resident or a Singapore resident faces no such issue. Get advice from a tax lawyer in your home country before assuming the OÜ structure is tax-neutral for you personally.

Yes — the Commercial Code (Äriseadustik) requires every OÜ to have a registered address in Estonia. This is the official address recorded in the Business Register and used for EMTA correspondence. However, it does not need to be an office you use or visit — it can be a virtual registered address service (provided by service providers in Tallinn). These services typically cost €10–20/month and provide a registered address and mail forwarding. The registered address is not your place of business — it is simply the legal address for official correspondence. For EMTA purposes, correspondence goes to the EMTA e-Tax portal, not the physical address. For Business Register purposes, the address is where legal notices can be served.