Estonia has lost hundreds of millions to company debt schemes

Estonia has lost hundreds of millions of euros in unpaid taxes in recent years because of operators who help companies evade their debts, ERR reported. The country’s insolvency service says it has seen about 233 million euros left unpaid by roughly 600 to 650 companies over three and a half years.

The service’s head, Signe Viimsalu, discussed the schemes in a call arranged by the ERR programme Pealtnägija with Kalev Kosk, who offers services to business owners seeking to shed company debts. Viimsalu has spent the past three years working to improve transparency in the business environment, while Kosk has for years helped entrepreneurs distance themselves from liabilities, the report said.

Established in 2022, the insolvency service is an independent unit within the Competition Authority. Its four staff members oversee bankruptcy proceedings, investigate whether financial difficulties were caused unlawfully and seek ways to prevent business leaders from avoiding responsibility after transferring assets or committing crimes.

Bankruptcy administrators and sworn attorney Viljar Kähari said companies that cannot meet their obligations should be liquidated or file for bankruptcy, rather than be sold off to avoid debts. Bankruptcy administrator Toomas Saarma said unpaid wages can ultimately become a cost for society, as workers may receive compensation from the Estonian Unemployment Insurance Fund.

Pealtnägija has previously reported on company buriers, whose services are still openly offered. The insolvency service was set up in part to analyse and address the problem, Viimsalu said.

Viimsalu said more than 300,000 private limited companies are listed in Estonia’s commercial register, and about 20 percent are problematic in some way. She also said 20,000 legal entities currently have no management board member.