Audit of a Latvian company, financial statements, accounting, consulting in Latvia

The Republic of Latvia (Latvia) is a state in Northern Europe, located on the shores of the Baltic Sea. Latvia offers many advantages for business management, all of which create a favorable climate for both business and life in this country.

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(according to the actual time spent)

100-400 USD per hour

(according to the actual time spent)

100-400 USD per hour

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+44 0 207 822 85 93

General requirements

According to legislation of Latvia, all Latvian companies must keep accounting records and file annual accounts and a tax return with state authorities every year by 30 April (large companies by 31 July).

The following must file full financial statements in Latvia:

commercial companies;
cooperative societies;
European commercial interest groups registered in Latvia;
European cooperative societies registered in Latvia;
European commercial companies registered in Latvia;
sole traders with income of over 300 000 EUR;
farms and fisheries with income of over 300 000 EUR.

Sole traders, farms and fisheries with income of up to 300 000 EUR report in a simplified form.

The full annual financial report includes:

Balance sheet;
Profit and loss statement;
Cash flow statement;
Statement of changes in equity;
Statement of facts;
Annex.

In addition, large enterprises must provide:

(net) turnover divided into business areas;
report on amounts paid to sworn auditors.

Large companies are companies that meet 2 of the following 3 criteria:

balance sheet total is 20 000 000 EUR;
sales revenue is 40 000 000 EUR;
average number of employees is 250.

The form and rules of filing of annual reports for credit institutions, insurance companies, private pensions funds, investment broker companies, investment management companies, religious organizations and political parties are regulated by special regulations of the Government of Latvia and differ significantly from the form and rules of filing of annual reports of business entities.

Traditionally, reporting period in Latvia is a calendar year. Recently incorporated entities that have been operating for less than 1 year can, as may be agreed, either report on an incomplete year or include the first incomplete year in the next report. And the first reporting period must not last more than 18 months.

In the case of late filing of accounts, sanctions shall be imposed in accordance with administrative legislation.

Audit of accounts

A mandatory audit is required for:

large- and medium-sized companies,
all entities with securities traded on a regulated market,
consolidated financial statements prepared by a parent in a group of companies.

A large company is a company which on the balance sheet date exceeds at least two of the following criteria:

total balance sheet – 20 000 000 EUR;
net revenue – 40 000 000 EUR;
an average of 250 employees in the reporting year.

A medium company is a company which on the balance sheet date does not exceed the criteria for large companies.

For small companies there are 3 opportunities:

a statutory audit must be performed;
a review of financial statements must be performed (by certified auditors);
no audit is required.

A statutory audit must be performed if one of the following conditions for a small company is met:

1) exceeds two of the following criteria for two consecutive years:

total balance sheet – 4 000 000 EUR;
net revenue – 8 000 000 EUR;
an average of 50 employees in the financial year;

2) is a parent in a group of companies;

3) is a public person’s company or its subsidiary or a public-private capital company within the meaning of the Law On Governance of Capital Shares of a Public Person and Capital Companies; or

4) elects to recognize certain financial statement items in accordance with IFRS.

A review of financial statements must be performed if above mentioned conditions for statutory audit do not apply for small company and if it exceeds at the balance sheet date two of the following criteria for two consecutive years:

total balance sheet – 400 000 EUR;
net revenue – 800 000 EUR;
an average of 25 employees in the financial year.

Such companies can be notionally called micro-enterprises.

In all other cases an audit for small companies is not required.

Tax accounts

According to legislation of Latvia, all Latvian companies must file tax returns (along with an annual report) every year by 30 April.

Tax must be paid within 15 days after the tax return is filed.

Liability

Legislation of Latvia provides for the following kinds of penalties:

late payment penalty of 0,05% of the amount of unpaid tax per day;
penalty of 5% of the total amount of undeclared transactions where the size of each of them exceeds 1 683 USD;
refusal to provide tax benefits for unreasonably late payments;
penalty for intentional understatement of the tax base that equals the tax unpaid thereon (in the case of a second violation, the penalty doubles);
penalty for not meeting the deadline for filing a tax return (up to 15 days – 0,1%, 15 to 30 days – 0,5%, from 30 days – 1% of the tax amount);
penalty for conducting business without registration with tax authorities (equals the amount of unpaid taxes or double the amount of the previous period).

Systematic and serious violations may result in suspension of business and criminal liability (imprisonment of up to 5 years).

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Banks of Latvia

BlueOrange (formerly Baltikums Bank)

1 800

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