When running an Estonian company, you will inevitably come across Estonian terms, in official letters, government portals and registers. Mastering the language is not necessary, but knowing about thirty key terms will help you quickly understand what is expected of you and when you need to act.
This glossary is intended as a practical guide. Terms are grouped by topic, and each key term is referenced in an article where it is discussed in more depth.
If you already have an official letter in your possession that raises questions or concerns, start with the article Decoder of Estonian Official Letters. This dictionary is intended for leisurely familiarization and everyday use.
Need help?
Sometimes, a single correctly understood term is enough to avoid a costly mistake. That's what this dictionary is for.
Did you come across a term or official letter whose meaning is unclear?
Estonian business dictionary: every term a foreign owner will actually encounter
When running an Estonian company, you will inevitably come across Estonian terms, in official letters, government portals and registers. Mastering the language is not necessary, but knowing about thirty key terms will help you quickly understand what is expected of you and when you need to act.
This glossary is intended as a practical guide. Terms are grouped by topic, and each key term is referenced in an article where it is discussed in more depth.
If you already have an official letter in your possession that raises questions or concerns, start with the article Decoder of Estonian Official Letters. This dictionary is intended for leisurely familiarization and everyday use.
Corporate forms and people
OÜ - LLC (private limited company)
The most common form of business in Estonia and most likely the form of your company. The liability of the owners is generally limited to the amount of their contribution to the company. Internationally, it is most comparable to a Ltd or GmbH type company.
AS - Ltd. (joint stock company)
A larger and more strictly regulated form of business, used primarily for larger companies. It is much less common among businesshub.ee clients.
MTÜ - NPO
Non-profit organization. Its operations and legal framework differ from companies, and this series of articles focuses mainly on private limited companies.
Juhatus. Management Board
The person or persons who manage the company and represent it according to law. If you have founded a private limited company with one shareholder, you are usually also a member of the board.
Juhatuse liige. Management Board member
A specific member of the board of directors who is responsible for the management of the company. Several legal responsibilities may fall on a board member personally, not just on the company. (Read more: Annual report not submitted. What to do?)
Osanik. Partner (shareholder)
The owner of the company. A shareholder and a board member do not have to be the same person.
Osa. Part (Share)
Participation in a private limited company, or a company's ownership unit.
Kontaktisik - Contact person
The official contact in Estonia of an Estonian company managed from abroad. If the obligations related to the contact person are not fulfilled, the company may become officially difficult to access for the register. (Read more: Silent epidemic... - Article 28 )
Money and capital
Osakapital - Share capital
The nominal capital of a company, which is stated when the company is founded. Starting from the changes of 2023, a private limited company can also be founded with a very small share capital. The amount of share capital does not indicate the financial position of the company or the money in the account.
Omakapital - Equity
The difference between a company's assets and liabilities. This indicator reflects the company's actual financial position and is important for the board of directors, owners, and the register.
Netovara - Net assets
In practice, the term net assets is often used to mean equity. The most important thing to know is that the law sets minimum requirements for net assets. If net assets fall below the permitted limit, the management board must resolve the situation. (Read more: Negative equity in an Estonian company...)
Käive - Turnover
The company's sales revenue over a certain period. The amount of turnover affects, among other things, when the obligation to register as a VAT payer may arise. (Read more: When do I have to register as a VAT payer? - Article 27)
Dividend
Distribution of profits to company owners. In Estonia, distributed profits are taxed at the company level upon payment. (Read more: How to pay yourself money from an Estonian company? )
Taxes and reporting
Käibemaks, VAT (in Estonian termin, Tax on Turnover)
A consumption tax added to the price of a good or service. The VAT rate may change over time, so it is important to check the current rate before publishing.
KMKR number - VAT number
The company's VAT registration number. The need for this depends on the company's activities, turnover and transactions, not just the amount of turnover. (Read more: When do I have to register as a VAT payer? - Article 27)
Maksu- ja Tolliamet (MTA) - Estonian Tax and Customs Board (ETCB)
A government agency to which tax returns are submitted and taxes are paid. The role of the Tax and Customs Board is different from that of the Commercial Register.
Äriregister - Commercial register
The national register where a company is legally registered and where the annual report is filed.
Majandusaasta aruanne - Annual report (Financial Year-End Report)
Every Estonian company must submit an annual report even if the company has not had any economic activity. The usual submission deadline is six months after the end of the financial year. (Read more: Annual report not submitted. What to do?)
TSD
Monthly tax return, which includes, among other things, salaries, board member fees and related taxes. The usual submission deadline is the 10th of each month. (Read more: Calendar of Deadlines for Estonian Companies. Article 33)
KMD
VAT return submitted by VAT payers. The usual submission deadline is the 20th of each month. (Read more: Calendar of Deadlines for Estonian Companies. Article 33)
E-invoice
A structured electronic invoice, which is increasingly used in billing between businesses and the public sector.
Business account
A simplified taxation solution for small-scale personal businesses. This is not an alternative to a corporate bank account or a private limited company, but a separate legal solution.
Violations and enforcement measures
All of the following terms refer to situations in which it is worth acting quickly. If necessary, first read the Decoder of Estonian Official Letters.
Warning order
Official notification of the deficiency with a deadline for its elimination. Timely action usually ends the procedure.
Penalty warning order
Warning that failure to rectify the deficiency may result in a fine.
Penalty regulation
A formal decision to impose a fine. Payment of a fine does not release the company from fulfilling its original obligation.
Deletion warning
The last warning before the company's compulsory desolution procedure. You must act immediately upon receiving it.(Read more: Your company was deleted from the register... )
Compulsory desolution
A procedure for winding up a company initiated by a court or registry. It is often possible to resolve the situation at an early stage. (Read more: Letting the Commercial Register delete the company: a cheap way out or a trap? )
Liquidation
Voluntary winding up of a company in accordance with the procedure prescribed by law. This is a common and controlled way of winding up a business. (Read more: Estonian Company Closure - Article 23)
Business ban
A court-ordered ban on acting as a board member or founding new companies. This is a rarely used but very serious measure.
Digital identity
E-residency
A digital ID issued by the Estonian state to foreigners. It allows you to manage a business online, but does not grant a residence permit, citizenship, or determine tax residency. Read more: Why can't Estonia protect your business from the tax authorities in your home country? )
Digital ID
An e-resident digital identity card that can be used for authentication and digital signatures. The card is valid for a limited time and it is important to renew it on time. (Read more: The ID card trap - Article 20)
Smart-ID and Mobile-ID
Electronic authentication and digital signature tools. E-residents should be aware that their usage options depend on the chosen solution and may be related to the validity of the digital ID. (Read more: The ID card trap - Article 20)
FAQ
Do I need to learn Estonian to run my business?
No. You do not need to be fluent in Estonian to run an Estonian company. It is enough to know the main terms and be able to understand the content of official letters. Daily business is mostly possible in English, and professional advice can be used if necessary.
To understand th official letters, start with the article Decoder of Estonian Official Letters
What is the difference between the Commercial Register and the Tax and Customs Board?
These are two state agencies with different roles.
The Commercial Register maintains the company's registry data and submits the annual report there.
The Estonian Tax and Customs Board (ETC) is responsible for tax administration. Tax returns are filed and taxes are paid there.
When you receive an official letter, first look at which institution it comes from - this will help you immediately understand what obligation it is.
Do net assets and negative equity mean the same thing?
Not really.
Net assets describe the amount of equity in a company. A problem arises when it falls below the limit set by law.
Negative equity means that equity has fallen below zero. This is a more serious situation, but both terms are related to different levels of the same financial indicator. ( Read more: Negative Equity in an Estonian Company. )
Does a business account mean the same as a company?
No. A business account is a simplified taxation solution for small-scale personal businesses. It is not a private limited company or a corporate bank account and is subject to different rules.
Which terms require the fastest response?
The fastest response is required to concepts related to official procedures:
- fine warning order;
- fine regulation;
- deletion warning;
- forced termination;
- business ban.
If you receive such a letter, do not leave it for later. If necessary, first use the Decoder of Estonian Official Letters and act as soon as possible.
Related reading
Decoder of Estonian Official Letters;
Negative Equity in an Estonian Company;
The ID card trap (Article 20);
Estonian Company Closure (Article 23);
When is a VAT number required? (Article 27)
Silent epidemic... (Article 28)
Calendar of Deadlines for Estonian Companies (Article 33)
Need help?
Sometimes, a single correctly understood term is enough to avoid a costly mistake. That's what this dictionary is for.
Did you come across a term or official letter whose meaning is unclear?