The requirements of consolidate annual report in Latvia
The Law on Consolidated Annual reports applies to commercial companies and co-operative societies registered in Latvia (hereinafter – the company) if they are parent companies of a group of companies.
General obligation to prepare consolidated annual reports
The parent company of a group of companies shall have the duty to prepare consolidated annual report for every accounting year, if this parent company, directly or indirectly (with participation of one or more subsidiary companies of the group of companies) has attained influence in accordance with at least one of the following conditions:
1) it has the majority of stockholders’ or shareholders’ voting rights (more than 50% of the voting rights) based on the participatory capital in the relevant subsidiary company (irrespective of the amount of this participatory share);
2) it has the right to appoint or remove the majority of the members (more than 50% of the members) of the supervisory or executive bodies of the subsidiary company based on the participatory capital in the relevant subsidiary company (irrespective of the amount of this participatory share); or
3) it has the right to exercise the rights set out in the first and second point, pursuant to a contract entered into together with other stockholders or shareholders of the subsidiary company or in accordance with the charter of this company (regardless whether the parent company does or does not have participatory capital shares in this company.
In line with Latvian legislation the company is exempt from preparing the consolidate annual report if the company together with it’s subsidiaries two consecutive years do not exceeding two of the below mentioned criteria:
- balance sheet total of 1 400 000 EUR;
- net turnover of 3 400 000 EUR; and
- average number of employees 250 in the financial year.
We have also contacted tax authorities in order to investigate whether the consolidate annual report will be accepted by Latvian tax authorities in case the company is not liable to submit such according to the criteria mentioned above. The inspector of Latvian tax authorities has communicated to us that most probably such consolidate annual report will be approved. However, we rise your attention that this opinion could not be considered as official and binding, only informative. Therefore if company want to submit consolidate annual report even though it is exempt from it, the company should seek for official opinion from tax authorities.
Moreover, consolidate annual report should be audited.
Should you wish receiving more information regarding consolidate annual accounts in Latvia, please contact our English speaking lawyers and tax consultants in Latvia, Lithuania, Estonia via firstname.lastname@example.org