Has your OÜ (a private limited company) incurred a tax debt, but does not currently have the money to pay it? Interest starts accruing on the first day of delay. If no action is taken, the Estonian Tax and Customs Board (EMTA) can freeze the company’s bank accounts and seize its assets. We explain how tax debt grows, when payment in instalments is available and what to do to avoid extra costs and compulsory collection.
How a company’s tax debt grows
Interest accrues on the outstanding debt from the first day of delay at 0.06% per day, equivalent to 21.9% per year on a simple annualised basis. It continues to accrue until the debt is paid.
Example. A company owes €10,000 in tax. If the outstanding amount stays unchanged, interest accrues at €6 per day. That amounts to €180 over 30 days and approximately €1,100 over six months.
There are other consequences too. A pending VAT refund does not cancel a company’s tax debt. According to EMTA’s guidance, the tax authority collects the full debt while the refund claim is being checked, without taking the amount under review into account. The refund can only be offset against the debt once it has been approved. The debt may also appear in EMTA’s public arrears inquiry, where business partners can check it.
The longer a company puts off addressing the problem, the larger the amount payable becomes. If there is not enough money to pay the taxes, it is therefore worth considering an instalment plan early.
How to apply to pay a company’s tax debt in instalments
If the company cannot pay the debt in full immediately but can repay it in parts, it can apply for payment of tax debt in instalments (maksuvõla ajatamine).
The most convenient way to apply is through the e-MTA online environment. An instalment plan can be requested for 2 to 24 months, with equal or unequal payments. Under a schedule with unequal payments, the final payment must not exceed 50% of the total debt covered by the plan.
What to check before applying
- All mandatory tax returns have been filed.
- The company has no unpaid obligations that cannot be included in an instalment plan: second-pillar pension contributions, road user charges, fines and certain penalty payments imposed by EMTA.
- EMTA is not already considering another instalment application from the company.
If these requirements are not met, the application may be rejected. Before applying, check the company’s arrears and tax return status in e-MTA.
When an instalment plan can be approved automatically
If the tax debt is between €10 and €100,000 and the requested repayment period is no more than 18 months, e-MTA may make an automatic decision.
The company must also meet additional conditions. For example, it must not have undergone a tax audit that found irregularities in the past 12 months, and its board member must not have tax arrears that are not covered by an instalment plan.
Failing to meet the conditions for an automatic decision does not always mean refusal: an EMTA official may review the application instead.
Which documents may be required
If an EMTA official reviews the application, a decision is made within 20 days. The application must include a balance sheet as at the end of the preceding month, an income statement and the annual report for the previous year if it has not yet been filed with the Commercial Register.
The tax authority may also request security for the debt, such as a mortgage over real estate. If the same debt has already been placed on an instalment plan twice, a new plan will require collateral or a third party’s commitment to secure payment.
An accountant in Estonia who maintains the company’s accounts can help prepare the balance sheet, income statement, annual report and payment schedule. They can assess how much the company can realistically pay towards the debt each month while meeting its current expenses and taxes.
Can the interest rate be reduced?
When applying for an instalment plan, you can request a 50% reduction in the interest rate. This reduction is applied automatically when the plan receives automatic approval.
The reduced rate applies from the date the instalment plan is approved. Interest accrued before that date is not recalculated.
Example. On a tax debt of €10,000, standard interest is €6 per day. If the rate is halved, interest on an unchanged outstanding balance will be €3 per day. As the principal is repaid, the daily interest amount will also decrease.
When a company’s bank accounts and assets can be seized for tax debt
If a company’s tax debt remains unpaid and no instalment plan is in place, EMTA can begin compulsory collection. According to EMTA, the procedure usually involves several stages:
- Arrears notification. The tax authority informs the company of the debt by letter or SMS.
- Payment order. If the debt remains unpaid, EMTA issues an official payment order (korraldus) warning of compulsory collection. The usual payment deadline is 10 days, but in exceptional cases it can be 48 hours.
- Freezing bank accounts. If the debt is neither paid nor covered by an instalment plan, the tax authority can instruct banks to freeze the company’s accounts. To have the freeze lifted, the company must resolve the arrears by paying them or obtaining an instalment plan.
- Recovery from other assets. EMTA can recover money owed to the company by customers or tenants and take measures concerning securities and other assets.
- Referral to a bailiff. If the earlier measures do not succeed, the tax authority can refer the debt to a bailiff (kohtutäitur). The bailiff’s fees and enforcement costs are then added to the debt. These must be paid even if the tax liability is later reduced after tax returns are corrected.
Once a debt has been referred to a bailiff, it is generally no longer possible to arrange an instalment plan through EMTA. The company can ask the bailiff to allow payment in parts, but the bailiff must agree the terms with the tax authority. It is therefore easier to obtain an instalment plan before the case reaches this stage.
Common mistakes companies make when they have tax arrears
Ignoring EMTA’s letters. If a company does not respond to an official payment order, the tax authority can begin compulsory collection after the deadline expires.
Stopping tax return submissions. Tax returns must still be filed on time even if there is no money to pay the taxes. Missing returns can prevent an instalment plan from being granted. If the returns contain errors, an accountant can check the calculations and prepare corrections.
Taking money out of the company before settling its tax debt. The tax authority scrutinises dividends, loans to owners and personal expenses paid by an OÜ particularly closely when the company has tax arrears, especially if these payments leave it without funds to repay the debt. Read more in “Taxation of non-business expenses in Estonia”.
Delaying an instalment application. The earlier a company assesses its finances and proposes a workable payment schedule to the tax authority, the better its chances of resolving the arrears before additional collection measures are taken.
When a board member is liable for a company’s tax debt
As a general rule, an OÜ’s tax debt is paid from the company’s own funds and assets. The existence of arrears does not in itself mean that an owner or board member must pay them from personal funds.
The law does, however, provide exceptions. If a board member breaches their duties intentionally or through gross negligence, causing taxes to go unpaid, EMTA can issue a separate decision holding them personally liable.
In 2026, Estonia’s Supreme Court confirmed that, in certain circumstances, a court can authorise restrictions on the disposal of a board member’s personal assets before a decision on their liability has been made.
For more on when an OÜ’s tax debt can put a board member’s personal assets at risk, read “An OÜ’s tax debt: when a board member’s personal assets are at risk”.
How an accountant can help with tax debt
A shortage of funds for taxes can often be identified before the payment deadline. Regular checks of the accounts and upcoming obligations help the company assess its position and prepare to pay on time.
Finance PRO has provided accounting services in Estonia since 1998. We will check the tax debt and accrued interest calculations, prepare a balance sheet and income statement for an instalment application and help draw up a realistic payment schedule.
If EMTA has already started collection, accounting support can help clarify the calculations, check tax returns and prepare the necessary documents. A dispute over a board member’s personal liability or court-ordered asset restrictions will also require a lawyer.
Does your OÜ have a tax debt, or have you received a letter from EMTA? We will check the calculations and explain which steps can be taken through accounting support. The initial assessment of your situation is free.
Telephone: +372 5366 6674
Email: info@fpro.ee
Find out more about our accounting services in Estonia.
Read also
- An OÜ’s tax debt: when a board member’s personal assets are at risk
- Taxation of non-business expenses in Estonia
Information is current as of 10 November 2026. This article is for information only and does not replace individual tax or legal advice.
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