Before submitting the annual report, it is recommended to also review the VAT statements. If you submit the VAT statement as a file or via an integration to the Estonian Tax and Customs Board (EMTA), the system automatically saves the statement and the period closing entry for the VAT accounts.

The purpose of the VAT account closing entry is to clear the balances of the sales and input VAT accounts in order to reflect the payable or overpaid VAT on a single consolidated account. If the closing entry have not been saved, the balance sheet will display misleading information (for example, input VAT under receivables or sales VAT under liabilities), which misrepresents the company’s true financial situation.

Review all VAT statements for the reporting period. A saved statement is marked with a green dot nest to the month name, while an unsaved statement has a grey dot and should be saved.

If any line in the saved statement appears in red, hover the cursor over the amount to view additional information. The red color indicates that the amount has changed after the statement was submitted (saved).

Identify the reason for the change and take appropriate action. If the change is due to a purchase invoice added later, first make sure it was recorded in the correct period. If the invoice was mistakenly added to a previous period, correct the invoice date. If the invoice was added to the correct period but only later, delete the saved statement and the VAT account closing entry. Then submit the corrected statement to EMTA (if it has not already been submitted) and save the statement again in the program.

Compare all VAT statements for the reporting period with the reports submitted to EMTA.

Review the main ledger of account 2510 VAT summary account. The goal is for this account to have a zero balance between the VAT payment due date and the end of the month. After the VAT obligation is settled, the balance should return to zero, and when the new VAT statement closing entry is saved, a new liability (or VAT prepayment) will be recorded.