Legislative changes in Estonia for small enterprises

Estonia: A series of changes lowering the administrative burden of micro- and smaller enterprises has been implemented from 1 January 2016.

From now on the Accounting Act defines enterprises by their size. A micro company is a company with assets up to 175 000 euro, its obligations do not exceed available capital and reserves, it has one owner who also acts as a member of the board and its revenues in the accounting year do not exceed 50 000 euro. A small enterprise is a company fulfilling two out of three of the following conditions: assets up to 4 million euro, revenues up to 8 million euro and an average number of employees during the accounting year up to 50 persons.

Starting from the current accounting year micro- and smaller enterprises can follow a simplified procedure for presenting their annual reports. Micro-entrepreneurs need to present to the commercial registry only two main reports: a short balance sheet and an income statement (profit-and-loss account). Small entrepreneurs are additionally required to present some appendixes (fewer than before). Micro- and smaller enterprises are now exempt from having to compile cash flow statements and statements in changes of equity. Annual reports still have to contain a basic management report.

The Auditors Activities Act has also been amended: the requirements for a mandatory audit of annual accounts were raised twofold and the requirements for a mandatory review of annual accounts were raised 1.6 times. Micro and small enterprises are also exempt from auditing their packaging records. The Ministry of Finance estimates that the number of mandatory audits thus avoided will be around 1 335 of the approximately 158 000 private limited liability companies currently registered in Estonia. These new terms apply to reports that contain reporting periods starting from 1 January 2016 or later.

Several business-related costs have been increased: The brutto minimum wage has been raised from 390 euros to 430 euros a month (this change affects approximately 50 000 workers). Several excise fees are also increased, most important among them the excise on gasoline and diesel fuel. The tax-exempt amount is raised from 160 to 170 euros a month.

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