It will soon be time to prepare annual reports for the financial year 2020. Estonian companies with parent companies in the UK will have to take into account new rules.

Starting on 1 January 2021, the UK is considered a third country with respect to the EU, and so British parents can no longer be considered a “consolidating entity registered in a Contracting State” for the purposes of subsections 29 (5) and (6) of the Accounting Act and the exceptions set forth in legislation cannot be applied to consolidation.

However, Estonian-based subsidiaries of a consolidation group whose consolidating entity is located in the UK can get an extension. Specifically, they can apply the exception in subsection 29 (5) and (6) of the Accounting Act when preparing financial statements for 2020 if the subsidiary’s financial year ended on 31 December 2020 at the latest.

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