Your accountant emails you about the KMD, your notary mentions the põhikiri, and RIK sends a reminder about the majandusaasta aruanne — and none of it means anything until someone translates it. Running an Estonian OÜ, or working through e-Residency, comes with its own vocabulary of abbreviations, tax terms and legal words that show up in emails and portals long before anyone explains them. This glossary defines more than 50 of them in plain English, each entry standing on its own so you can look up exactly the term in front of you.
The short answer: terms people look up most
OÜ is Estonia’s private limited company, the default entity for e-residents; minimum share capital is just €0.01.
KMD is the monthly VAT return, due by the 20th of the following month; the standard VAT rate is 24% since 1 July 2025.
TSD is the monthly payroll and distributions declaration, due by the 10th, with separate annexes for salary, board fees, dividends and benefits.
EMTA is the Estonian Tax and Customs Board, the authority you file KMD, TSD and VAT registration with.
RIK runs the e-Business Register (äriregister), where you incorporate, file the annual report, and check any Estonian company’s registry code.
Distributed profit is taxed at 22/78 of the net payout; profit you reinvest and never distribute is taxed at 0%.
Company forms and the register
OÜ (osaühing) — the private limited company
An OÜ is Estonia’s private limited company, the entity almost every e-resident incorporates. Minimum share capital is just €0.01, formation is fully online, and owners’ liability is limited to their contribution.
AS (aktsiaselts) — the public limited company
An AS is Estonia’s public limited company, built for larger businesses with wider share ownership. It needs far more capital than an OÜ and adds a supervisory board, so most small founders never need one.
FIE (füüsilisest isikust ettevõtja) — the sole proprietor
A FIE is a sole proprietor trading under their own name, with no separate legal entity and no liability shield. It’s simpler to register than an OÜ, which is why most non-resident founders choose an OÜ instead.
MTÜ (mittetulundusühing) — the non-profit association
An MTÜ is Estonia’s non-profit association form, for clubs and organisations that don’t distribute profit to members. It’s filed through the same e-Business Register as an OÜ, just under different rules.
äriregister — the commercial register
The äriregister (commercial register) is Estonia’s public, free-to-search record of every company — legal form, registry code, board members and filed reports, at ariregister.rik.ee.
RIK (Registrite ja Infosüsteemide Keskus) — the registers centre
RIK is the Centre of Registers and Information Systems, the government body running the e-Business Register. “Filing with RIK” simply means submitting through that portal at ariregister.rik.ee.
Registry code (registrikood)
The registry code is the unique number the äriregister assigns to every Estonian company on incorporation. It’s quoted on invoices and correspondence and never changes for the company’s life.
Juriidiline aadress — the legal address
The juriidiline aadress (legal address) is the registered Estonian address every OÜ must hold, regardless of where the founder lives. Non-residents typically buy this as a paid service, and it’s required for as long as the company exists.
Kontaktisik — the contact person
A kontaktisik (contact person) is a locally reachable representative required whenever an OÜ’s entire management board lives outside Estonia. It’s a formal requirement, usually bought alongside the legal address, not optional paperwork.
Põhikiri — the articles of association
The põhikiri (articles of association) sets the company’s share capital, decision rules, and any special provisions, such as waiving notarisation for share transfers. A standard-form põhikiri is available for fast online incorporation; a custom one usually needs a notary.
Osakapital — share capital
Osakapital (share capital) is the value shareholders contribute to the OÜ, with a legal minimum of just €0.01. It matters later too: at least €10,000 fully paid up, plus an articles provision, lets share transfers skip the notary.
Ülekurss — share premium
Ülekurss (share premium) is what an investor pays above a share’s nominal value, common when shares issue at a much higher valuation. It’s booked separately from osakapital and matters for later cap-table and dividend calculations.
Osanik — shareholder (of an OÜ)
An osanik is a shareholder of an OÜ — the term specific to this legal form, where an AS uses aktsionär instead. Osanikud vote on dissolution, articles changes and dividends; a solo founder is simply the sole osanik.
Osanike nimekiri — the shareholder register
The osanike nimekiri (shareholder register) is the official list of who owns what share of the OÜ. Banks, investors and the register itself rely on it to confirm ownership before any transfer or payout.
Juhatuse liige — management board member
A juhatuse liige (management board member) runs the company day to day and is personally held responsible for filings such as the annual report. By default, board members also become the liquidators if the company dissolves.
Prokurist — authorised representative
A prokurist holds broad power of attorney to act for the company in business transactions, entered in the äriregister for third parties to verify. It’s narrower than a board seat — a prokurist can’t approve the annual report.
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Taxes and rates
EMTA (Eesti Maksu- ja Tolliamet) — the Estonian Tax and Customs Board
EMTA is the Estonian Tax and Customs Board, collecting VAT, income tax and social tax and processing every KMD and TSD filing. Once a company is deleted, EMTA can no longer act for it — see emta.ee/en.
KMKR number — the VAT registration number
A KMKR number is the VAT ID EMTA issues once a company registers, voluntarily or after turnover passes €40,000. It appears on every VAT invoice from that point on.
Käibemaks — VAT
Käibemaks is Estonia’s VAT, charged at a standard rate of 24% since 1 July 2025. Registration is mandatory once rolling 12-month turnover passes €40,000, and voluntary below that.
Tulumaks — income tax
Tulumaks covers two things: a flat 22% personal income tax on salary and fees, and corporate tax on distributions at 22/78 of the net payout. Profit the company keeps and never distributes is taxed at 0%.
Sotsiaalmaks — social tax
Sotsiaalmaks (social tax) is a 33% employer charge on top of gross salary or board fees, funding pension and health insurance. Its minimum monthly base of €886 gives a minimum obligation of €292.38 even for a token salary.
Töötuskindlustusmakse — unemployment insurance contribution
Töötuskindlustusmakse is unemployment insurance: 1.6% withheld from the employee, 0.8% paid by the employer. It applies to salaried employees but not to board member fees.
Kogumispension — the funded pension (II pillar)
Kogumispension is Estonia’s funded second-pillar pension, withholding 2% of gross salary from participating employees. It’s deducted through payroll alongside income tax and social tax.
Erisoodustus — fringe benefit
An erisoodustus (fringe benefit) is any goods, service or monetary benefit given to staff because of their role — a company car, personal expenses, extra gifts. It’s the priciest route out of a company: 22/78 income tax plus 33% social tax.
Ettevõtlusega mitteseotud kulud — expenses unrelated to business
Ettevõtlusega mitteseotud kulud are company costs the law treats as unrelated to the business — fines, personal card purchases, unrelated assets. They’re taxed at 22/78, and only the non-business portion of a mixed expense is taxed.
Varjatud kasumieraldis — hidden profit distribution
A varjatud kasumieraldis (hidden profit distribution) is a shareholder loan EMTA reclassifies as a disguised dividend when it clearly won’t be repaid — no deadline, a growing balance, endless extensions. It’s taxed at the same 22/78 as a dividend.
Declarations and forms
KMD — the VAT return
KMD (käibedeklaratsioon) is the monthly VAT return every VAT-registered OÜ files, due by the 20th of the following month. It reports output VAT charged and input VAT reclaimed, and it’s filed monthly even at zero turnover.
KMD INF — the VAT invoice annex
KMD INF is a KMD annex listing invoice-level detail above a set threshold, so EMTA can cross-check a supplier’s output VAT against a buyer’s claimed input VAT. It’s filed alongside the KMD, same 20th-of-the-month deadline.
TSD — the payroll and distributions declaration
TSD is the monthly declaration covering everything paid out of a company to a person — salary, board fees, dividends, benefits — due by the 10th, split into annexes (4 benefits, 6 non-business expenses, 7 dividends).
INF 14 — the related-party loans report
INF 14 (part IV) is a quarterly report disclosing loans between a company and its parent, sister companies or group shareholders, due by the 20th of the month after the quarter.
VD — the intra-EU sales report
VD (aruanne ühendusesisese käibe kohta) reports intra-EU supplies to VAT-registered businesses in other EU countries. It lets tax authorities match a seller’s zero-rated sale against the buyer’s declared acquisition, filed on the KMD’s monthly cycle.
OSS — the One Stop Shop
OSS lets a company declare VAT on cross-border B2C distance sales in one quarterly return instead of registering in every buyer’s country. Below €10,000 in EU-wide sales you may charge your home rate; above it, the customer’s country rate applies.
E-arve — the e-invoice
An e-arve (e-invoice) is a structured, machine-readable electronic invoice, distinct from a PDF sent by email. It lets accounting software and tax reporting process it automatically rather than by manual entry.
E-arveldaja — the e-invoice operator
An e-arveldaja (e-invoice operator) transmits e-arved between businesses and their accounting systems, similar to a payment processor between buyer and bank. You’ll meet the term when your accounting software sets up automated invoice delivery.
Majandusaasta aruanne — the annual report
The majandusaasta aruanne (annual report) is the yearly statement every OÜ files with the äriregister, due within six months of year end — 30 June for a calendar year. Missing it risks fines up to €3,200 per violation, repeatable.
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Payroll and people
Töötamise register (TÖR) — the Employment Register
The töötamise register (TÖR) is where every employer must record an employee before their first working day, not as part of the monthly TSD. EMTA cross-checks it against payroll declarations, so a mismatch is an easy compliance flag.
Päevaraha — the tax-free daily allowance
Päevaraha (daily allowance) is a tax-free per-diem for staff travelling on business, covering meals and incidentals up to statutory limits. Actual travel and accommodation costs are reimbursed separately as documented business expenses.
Osalusoptsioon — the employee share option
An osalusoptsioon (participation option) lets staff acquire company shares tax-free once at least three years pass between grant and acquisition. Exercised earlier, it’s a fringe benefit — about €705 of tax on a €1,000 benefit.
Money leaving the company
Dividend (dividend)
A dividend is a profit distribution to shareholders, taxed at 22/78 of the net amount — €1,000 net costs €281.82 in corporate tax. The shareholder may still owe personal tax at home.
Juhatuse liikme tasu — board member fee
A juhatuse liikme tasu (board member fee) is taxed like salary with social tax but, unlike salary, without unemployment insurance, since a board member isn’t an employee for that purpose. It’s declared on the same monthly TSD, by the 10th.
Likvideerimisjaotis — the liquidation distribution
A likvideerimisjaotis (liquidation distribution) is the payout to shareholders when a company winds up, taxed only on the part exceeding their original contribution. Paid-in share capital returns tax-free; profit above it is taxed at the standard 22/78.
Closing down and problems
Likvideerimine — voluntary liquidation
Likvideerimine (voluntary liquidation) winds up a solvent OÜ: a two-thirds shareholder vote, liquidators settling creditor claims, then a final distribution. The realistic floor is six to seven months from the dissolution resolution to deletion, often longer in practice.
Sundlõpetamine — compulsory dissolution
Sundlõpetamine (compulsory dissolution) is the register-initiated process that can start once a company misses its annual report for an extended period. Fines already imposed against the company or its board members survive even after it’s struck off.
Pankrot — bankruptcy
Pankrot (bankruptcy) is the formal insolvency process for when a company’s assets can’t cover its debts — more serious than liquidation. Liquidators who discover insolvency mid-process must promptly file a bankruptcy petition instead.
Ametlikud Teadaanded — the official notices portal
Ametlikud Teadaanded is Estonia’s official gazette for dissolution announcements and creditor calls during liquidation. Publication there starts the clock: creditors get four months to submit claims from that date.
Viivis — late-payment interest
Viivis (late-payment interest) is interest EMTA charges on tax paid after its due date, accruing daily until settled. It stacks on top of any separate late-filing fine, not instead of it.
Maksukäsu kiirmenetlus — the expedited tax order procedure
Maksukäsu kiirmenetlus is EMTA’s expedited procedure for issuing a payment order on a clear, undisputed tax debt without a full assessment. It’s the mechanism behind many collection notices for unpaid VAT or payroll tax.
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The legal framework behind the terms
Raamatupidamise seadus — the Accounting Act
The raamatupidamise seadus (Accounting Act) sets Estonia’s bookkeeping rules — valid source documents, retention, annual report content. It’s the reason source documents must be kept for seven years.
Tulumaksuseadus (TuMS) — the Income Tax Act
Tulumaksuseadus (TuMS) is the Income Tax Act behind personal and corporate tax, fringe benefits, hidden distributions and the three-year option rule. Erisoodustus, varjatud kasumieraldis and osalusoptsioon all trace back to specific TuMS sections.
Äriseadustik (ÄS) — the Commercial Code
Äriseadustik (ÄS) is the Commercial Code governing companies themselves — formation, share transfers, dissolution and liquidation. The liquidation deadlines and the share-transfer notary exception both come from specific ÄS provisions.
Võlaõigusseadus (VÕS) — the Law of Obligations Act
Võlaõigusseadus (VÕS) is Estonia’s general contract law, behind supply, service and loan agreements. Founders meet it indirectly through their lawyer whenever a contract needs to reference the governing law.
Riigi Teataja — the State Gazette
Riigi Teataja is Estonia’s official State Gazette, the free site publishing every law, including consolidated English translations of the ÄS and TuMS. Check it before relying on any legal figure, since rules change on 1 January and 1 July.
Digital and e-Residency vocabulary
e-Residency
e-Residency is Estonia’s digital identity programme, letting a non-resident run an Estonian company remotely — signing and filing online from anywhere. It is explicitly not tax residency and grants no right to live in Estonia.
Digital ID
A digital ID is the smart card carrying the certificates an e-resident uses to authenticate and sign. Without it you can’t log into the e-Business Register or sign a põhikiri.
Digital signature
A digital signature made with the e-Residency digital ID carries the same legal standing as a handwritten one under Estonian and EU law. It lets an e-resident sign contracts and filings without ever visiting Estonia.
The most expensive part of any of these terms usually isn’t the state fee attached to it — it’s the months of filings, interest and professional help that follow from getting the deadline wrong.
Declarations at a glance
Form | What it reports | Deadline |
|---|---|---|
KMD | Monthly VAT return: output and input VAT | 20th of the following month |
KMD INF | Invoice-level detail behind the KMD | 20th of the following month |
TSD | Salary, board fees, dividends, benefits (via annexes) | 10th of the following month |
INF 14 (part IV) | Loans to/from parent, sister companies and group shareholders | 20th of the month after the quarter |
VD | Intra-EU B2B supplies of goods and services | 20th of the following month |
OSS | Cross-border EU B2C distance sales VAT | Quarterly |
Majandusaasta aruanne | Annual financial statements | 6 months after year end (30 June for calendar year) |
Rates at a glance (2026)
Rate or threshold | Figure | Applies to |
|---|---|---|
VAT (käibemaks) | 24% | Standard rate since 1 July 2025 |
VAT registration threshold | €40,000/year | Mandatory above this turnover |
Corporate tax on distributions | 22/78 of net payout | Dividends, hidden distributions, liquidation gains |
Corporate tax on retained profit | 0% | Profit not distributed |
Personal income tax | 22% flat | Salary, board fees and other personal income |
Basic exemption | €700/month | Universal for 2026 |
Social tax | 33% (employer) | Minimum base €886/month = €292.38 minimum |
Unemployment insurance | 1.6% employee + 0.8% employer | Salaried employees only, not board fees |
Funded pension (II pillar) | 2% | Withheld from participating employees |
Minimum wage | €886/month Jan–Mar, €946/month from 1 April | Two-tier for 2026 |
A short checklist for your first year
Confirm your registry code and check your filings on the äriregister.
Know your majandusaasta aruanne deadline (30 June for a calendar year) before you need it.
Decide whether to register for käibemaks before the €40,000 threshold forces you to.
Keep the osanike nimekiri and põhikiri current after any share change.
Document a real repayment date on any owner loan — INF 14 reports it either way.
Incorporate the OÜ and adopt the põhikiri.
Set up the legal address and, if the board is entirely abroad, the kontaktisik.
Register for käibemaks once turnover approaches €40,000, or earlier if it helps you.
Run payroll or board fees through TSD by the 10th; file KMD by the 20th.
File the majandusaasta aruanne within six months of year end, every year, even at zero turnover.
Frequently asked questions
What’s the difference between an OÜ and an AS?
An OÜ is Estonia’s private limited company, needing only €0.01 in share capital, and what almost every e-resident incorporates. An AS is the public limited company, with heavier governance and much higher capital — most small founders never need one.
Is KMD the same as TSD?
No. KMD is the VAT return, due the 20th, reporting output and input VAT. TSD is the payroll and distributions declaration, due the 10th, covering salary, fees, dividends and benefits.
Does e-Residency make me an Estonian tax resident?
No. e-Residency is a digital identity, not tax residency, and doesn’t change where you personally owe tax. Your company can still be taxed at home under place-of-effective-management, permanent-establishment or CFC rules.
What is INF 14 and why does it matter for shareholder loans?
INF 14 is the quarterly report disclosing loans between an OÜ and its parent, sister companies or group shareholders. These loans are routinely visible to EMTA, so one that looks like a disguised dividend risks 22/78 tax as a varjatud kasumieraldis.
How is a dividend taxed differently from a salary?
A dividend is taxed at company level, 22/78 of the net payout, with no social tax. A salary carries income tax plus 33% employer social tax — pricier, but it builds Estonian pension rights.
What happens if I miss the majandusaasta aruanne deadline?
Missing the annual report deadline risks fines up to €3,200 per violation, repeatable, against the company and board members personally. Continued failure can lead to sundlõpetamine, and existing fines survive even after the company is struck off.
Who is the kontaktisik and do I need one?
A kontaktisik (contact person) is a locally reachable Estonian representative, required whenever the entire management board lives abroad. If your whole board is outside Estonia — the normal case for e-residents — you need one.
Can I close a dormant OÜ by simply stopping payments?
No — “pausing” is not a legal status in Estonia. The annual report, legal address and contact person obligations continue regardless of turnover, and letting them lapse leads to fines, then sundlõpetamine.
What’s the difference between likvideerimine and pankrot?
Likvideerimine (liquidation) is the orderly route for a solvent company whose assets cover its debts. Pankrot (bankruptcy) is the more serious insolvency process required when they don’t.
