You launched your Estonian company quickly, with a remote setup, minimal paperwork, and a smooth process.
But closing it down isn’t the same story. Plenty of founders underestimate how much detail goes into shutting a company down properly. They figure it’s as easy as starting. It’s not.
If you ignore the process, you can end up with fines, tax debts, or legal liabilities that damage your reputation and follow you into your next project.
Whether you’re an e-resident, a startup founder, or advising a client, here’s what you need to know to close an Estonian company the right way.
Table of Contents
Why shut down in the first place?
Businesses close for various reasons. Here are the most common ones:
Whatever your reason, don’t leave the company sitting dormant. That can trigger late fees, regulatory penalties, and forced liquidation.
What to sort before you file for deletion
Before you can request removal from the Estonian Business Register, you need to tie up every loose end.
Settle debts and taxes
Before doing anything else, make sure every financial obligation tied to your business is cleared. That includes VAT, payroll taxes, unpaid invoices, and any outstanding social contributions. The Estonian Tax and Customs Board doesn’t grant leniency during liquidation- every euro must be accounted for.
Terminate employment contracts
Even if your entire team is based overseas, Estonia’s labour rules still apply. This means following all the standard requirements for notice periods, severance payments (if applicable), and compensation for unused leave.
Keep formal records of contract terminations- email chains aren’t enough. If there’s ever a dispute later on, you’ll need clear documentation that every employment obligation was properly closed out.
File all annual reports
Many founders assume that if they haven’t actively traded, reports aren’t needed. Not true. You’re still legally required to file an annual report for each financial year your business has existed.
That includes dormant years. Miss a filing and the Business Register can delay your company’s deletion, or reject it altogether. It’s not just a formality; it’s proof that your business complied with every step of the way.
Confirm no court proceedings
If there’s any ongoing court case, debt dispute, or regulatory investigation tied to your company, you won’t be able to proceed with the closure.
Everything has to be resolved and officially closed first. That includes minor claims- if it’s still active, your company can’t be deleted. You’ll need formal proof that there are no outstanding legal actions at the time of filing.
Without completing each of these steps, you won’t receive authorization to proceed with the official closure.
How the official closure process works
Once your records are in order, you’ll move to the formal liquidation. This isn’t an instant process-it can take months.
If any information is incomplete or filed incorrectly, the process can stall or result in penalties.
Why it pays to have legal guidance
Some founders think they can manage everything themselves. In simple cases, maybe that works. But if you have: cross-border ownership, intellectual property to transfer or multiple shareholders abroad…you’re going to save time and avoid mistakes by working with professionals.
Hedman partners regularly help foreign founders navigate liquidation. Their team:
A structured shutdown protects you from future claims and keeps your reputation strong.
Risks of ignoring the rules
When you skip the official process, the authorities have the power to force liquidation.
In practice, that means the state steps in to dissolve your company and can issue fines or penalties along the way. Even if you believe the business has no remaining assets or obligations, any outstanding taxes or debts stay attached to your name. Those liabilities don’t disappear, and they can quickly turn into personal responsibility if left unresolved.
A failed closure also leaves a permanent mark in public records. Anyone checking the Estonian Business Register can see that your company was forcibly removed or marked as non-compliant.
That can complicate future ventures, especially if you plan to start another business as an e-resident or work with investors who do due diligence.
It’s also important to realise that directors don’t automatically escape liability by stepping back. You can still be held accountable for unpaid taxes, incomplete reports, or unresolved contracts long after you’ve moved on.
The consequences of ignoring these obligations often last years, not months.
Additional steps founders often overlook
Even after sorting your finances, there are more details to cover:
Firms like Hedman Partners help draft these documents, ensuring that nothing gets left unfinished.
Alternatives to shutting down completely
Closure isn’t always the only option. Depending on your situation, you could:
If you’re unsure, consult a lawyer before making any decisions.
Finish well, protect your future
Estonia makes it easy to start a business. But ending it the right way still requires effort and precision.
Working with experienced legal advisors like Hedman Partners helps you close confidently. They’ll handle filings, guide you through each step, and protect you from mistakes that could cause long-term problems. A clean closure shows that you respect the rules, your partners, and your future as an entrepreneur.
