Opening a company in Estonia is easy. Now try closing it
In the practice of Progressor Õigusbüroo, we are increasingly encountering a situation familiar to many e-residents: a company was created for a specific project, the project did not take off, but the obligations to the state, the register and the tax authorities remained.
For a long time, Estonia has promoted itself as a country with a favourable business environment and as an advanced digital state that allows company managers to handle business matters remotely.
And this is indeed true. With an e-resident card, it is possible to open a company in the commercial register, register it and obtain a tax number from the Tax and Customs Board without major difficulties.
As a result, a large number of legal entities have been established whose founders and members of the management board are not territorially connected to Estonia.
Not all projects “took off”. Some businesses were closed, while others lost relevance due to the changing economic situation. As a result, we now have a large number of legal entities that do not conduct economic activity and are very likely not to do so in the future.
Why a non-operating company should not simply be left “hanging”
The existence of such a non-operating company creates a constant headache for the owner and the management board member. Even if the company does not conduct any activity, obligations remain: submitting reports, maintaining an up-to-date registered address, monitoring notices and publications in Ametlikud Teadaanded, filing the necessary declarations and responding to requirements from state authorities.
Why liquidation is more complicated than incorporation
At the same time, the ease of creating a company does not work in reverse: there is no magic “delete company” button in the commercial register.
The liquidation process is more complicated than incorporating the company.
- Under the law, liquidation cannot be completed faster than the statutory period, which is at least six months: creditors must be given time to submit their claims. During the liquidation process, an application must be submitted to the commercial register to commence liquidation proceedings, a liquidator must be appointed, and a notice must be published for potential creditors.
- During liquidation, accountants are involved in preparing the balance sheets, and a decision is made regarding the distribution of the company’s assets after its termination.
- If, during liquidation, it becomes clear that the company’s assets are insufficient to satisfy creditors’ claims, the liquidator may have an obligation to file for bankruptcy. And that is already a different legal scenario, with different risks, timeframes and consequences.
The main question is not how to “delete the company from the register”, but whether it can be closed safely.
Before starting liquidation, it is important to understand whether there are debts, unsubmitted annual reports, obligations to creditors, tax risks or grounds for bankruptcy. It is precisely this preliminary assessment that allows the right path to be chosen and prevents the closure of the company from becoming a personal problem for a management board member.
How Progressor Õigusbüroo helps with company liquidation
The lawyers of Progressor Õigusbüroo assist with the liquidation of companies in Estonia, assess risks for owners and members of the management board, and help determine whether ordinary liquidation is suitable or whether bankruptcy should be considered.
If necessary, we take on the role of liquidator and provide full-service support throughout the procedure.
