Accounting Latvia services

Accounting services in Latvia

Our accounting services in Latvia include both everyday accounting services and complex business activity support services, including relevant legal, tax planning, and other services.

The accounting services aligned with tax compliance, legal support and transfer pricing constitute a wide range of our professional services. We differentiate ourselves from competitors in extensive experience in cross-border transactions. Our services include ensuring compliance to accounting requirements for permanent establishments of foreign companies, VAT compliance, and payroll compliance for non-residents. Accounting services are usually inter-related with the decision-making, therefore, our specialists are always keen to support you with relevant tax and legal information. We have extensive experience in accounting services, taxes, and commercial law. The accounting practice is led by Artūrs Breicis who is a member of the Latvian Tax Consultants Association and a member of the Association of Chartered Certified Accountants (ACCA).

Accounting Latvia

Our daily accounting services in Latvia include:

  • Supplying accounting services for the companies with local and foreign capital and permanent establishments or  branches in accordance with regulatory enactments of legislation of the Republic of Latvia;
  • Tax accounting, drawing up and submitting tax reports for state institutions;
  • Representation in the State Revenue Service and other state institutions;
  • Drawing up and submitting VAT returns;
  • Drawing up annual reports;
  • Statistics report for the Central Statistical Bureau, Bank of Latvia;
  • Annual tax returns;
  • Drawing up statements and reports for the members or shareholders.

We provide the company’s finance audit (reviews) and related services in cooperation with qualified auditors:

  • Audit or review of the company’s financial statement;
  • Inspection of the internal control system;
  • Inspection of the company’s reorganization;
  • Inspection of reports on liquidation of the company.

All previously mentioned services are provided in accordance with International revision standards and laws of the Republic of Latvia.

Accounting services for legal entities

Each company carrying out business activities in Latvia should prepare and maintain accounting records. Accurate accounting is one of the most important conditions for a company’s development. Accounting should reflect the entire economic activity of the enterprise, which influences the condition of the company’s assets and liabilities In accordance with the Latvian Accountancy Act, accounting should be conducted in the Latvian language and kept in the territory of Latvia. As of 1 January 2014 accounting should be done in euro. Accounting documents must be provided to the State Revenue Service on request, for example, in case of the tax audit. Responsibility for accounting rests with the board of the company.

Annual report preparation

The reporting year includes 12 months and usually coincides with the calendar year. In case if a new enterprise is established, the first reporting year may include a shorter or a longer period, but no longer than 18 months. Companies have to prepare an annual statement in accordance with the Act, which includes the following sections:

  • Information about the company
  • The Board report
  • Balance sheet
  • Profit and loss statement
  • Cash flow statement
  • Report of changes in equity
  • Appendixes Copy of certified auditors report (for qualifying companies)
  • Participant decision or protocol statement from participants meeting with the decision on the confirmation of annual report

Exceptions

When the organization is in complies with the certain procedure defined by the Annual Reports Act and meets certain criteria, it is allowed not to prepare the separate parts of the annual report. In Article 54 of the Annual Reports Act the following criteria are mentioned:

  • Total balance — 400 000 euro
  • Net turnover — 800 000 euro
  • The average number of employees— 25

If the organization does not exceed two of these criteria, then it is permitted not to prepare:

  • The Board report
  • Cash flow statement
  • Report on changes in equity
  • Calculate and not to indicate deferred tax assets and liabilities in the financial statement
  • It is allowed to prepare a shortened appendix.

Document submission

The annual report must be presented to the State Revenue Service no later than one month after the approval of the annual report and not later than April 30. The company, whose activity size exceeds two mentioned criteria (i.e. total balance – 1 400 000 euro; net turnover – 3 400 000 euro; average number of employees – 250), and the company, which prepare consolidated annual report, submit annual report no later than July 31. Annual report is submitted to the State Revenue Service by using Electronic Declaration System (EDS).

Consolidated annual report preparation

Consolidated annual report is the annual report of the group that is prepared as a separate annual report of the enterprise, and provides information about all the group together, as one enterprise. In accordance with the Act, the liability of the parent company is to prepare consolidated annual report, if the parent company directly or indirectly received under the influence for at least one of the following statements:

  • A majority vote of shareholders or members (> 50%), based on the participation of its subsidiary in the allocation of capital (regardless of participation rate)
  • The right to appoint or remove the supervisors of subsidiary or majority of the members of the executive institutions (more than 50%), based on the participation of capital in subsidiary (regardless of participation rate)
  • The right to use mentioned in 1st or the 2nd points of law, based on an agreement concluded with other shareholders or participants or subsidiaries in accordance with the statutes of the organization (regardless of participation of the subsidiary company in the distribution of capital)

Parent company of the group may not prepare consolidated annual report, if that, along with its subsidiaries, do not exceed at least two of these criteria for two consecutive years:

  • Total balance — 1 400 000 euro
  • Net turnover — 3 400 000 euro
  • Average number of employees — 250

Certified auditor revision

The prepared consolidated annual report of the parent group should be reviewed by one or more certified auditors. In cases, when the consolidated annual report of the parent company and a consolidated annual report are reviewed by the same certified auditor, and both reports submitted at the same time, the auditors review on the consolidated and the annual report and can be combined.

Document submission

A copy of consolidated annual report, with the confirmed annual report and certified auditors review should be submitted to the State Revenue Service no later than one month after consolidated annual report confirmation, and no later than 7 months after the end of the year. As the annual report, it is submitted by using EDS.

Accounting services for individuals

We provide the following accounting services for individuals:

  • Preparation of the annual income tax return
  • Calculation and declaration of the capital gains
  • Preparation of additional income or assets declaration of those value changes
  • Consulting on accounting and personal income tax calculation
  • Assistance in dealing with tax issues of the State Revenue Service
  • Preparation of appealing thethe State Revenue Service decisions
  • Preparation of documents and tax returns for private entrepreneurs and individual businessmen

Accounting services for permanent establishments and branches of the foreign companies

Our employees have great experience in providing accounting and tax compliance services for branches of foreign companies and permanent establishments.

In accordance with the Latvian Accountancy Act, accounting should be conducted in the Latvian language and kept in the territory of Latvia. As of 1 January 2014 accounting should be done in euro. Accounting documents must be provided to the State Revenue Service on request, for example, in case of audit.

Basically, branches and permanent establishments in Latvia have to meet the same accounting requirements as local enterprises. However, branches and permanent establishments do not have to prepare a full annual report instead it is necessary to make the balance sheet and profit and loss account for the needs of corporate income tax.

Detailed information regarding the registration of a permanent representation and order of tax payments is provided here.

What should be taken into account while providing permanent establishment accounting?

For permanent establishments accounting  in Latvia is regulated by the Accounting Act as of 14 November 1992, with subsequent amendments. In accordance with the Latvia Accounting Act, accounting should reflect all the economic activities of an enterprise, as well as every fact or event which changes the state of property in the companies. The information provided by accounting should be truthful, clear and complete. Accounting should limit incomes and outcomes in taxation periods.

The manager of a company is responsible for all accounting documents, copies, and images. In the case of a branch or the permanent establishment, a manager is a person, who is authorized to represent the activities of the foreign merchant (non-resident), the branch of a foreign company or a permanent establishment.

As of 1 January 2014 accounting in Latvia should be done in euro. Accounting should be conducted in the Latvian language and kept in the territory of Latvia, but in case of a branch or permanent establishment, it is possible to use another language in addition to Latvian. If accounts use codes, symbols or single letters it is necessary to provide an explanation of them.

Accounting services for microbusiness taxpayers

A microbusiness taxpayer is an individual merchant, fishing or agriculture farm, as well as an individual, which is registered in the Registry of Enterprises as a limited liability company with the right to pay micro business tax. In order to become a microbusiness taxpayer, the company should comply with certain criteria:

  • Turnover does not exceed 40,000 EUR per year
  • Number of employees – up to 5
  • A salary per employee does not exceed 720 EUR per month
  • Shareholders are only individuals and are deemed to be employees of the company

Employees of micro-enterprises are:

  • An owner of micro-enterprise
  • An individual with an employment contract
  • Procurator.

A micro-business taxpayer should inform the employees of the micro-enterprise thereof in writing. The micro-enterprise should inform employees in writing that the personal income tax and mandatory State social insurance contributions of the employee of the micro-enterprise paying the micro-enterprise tax are determined from the turnover of the micro-enterprise and that the micro-enterprise employee has the right to join voluntarily the State social insurance, as well as a duty to submit the payroll tax booklet to the micro-enterprise.

Microbusiness tax rates

Microbusiness tax is calculated at a flat rate of 15%. The subject of micro business tax is the company’s turnover.

Microbusiness tax rates include:

  • Mandatory State Social Insurance Contributions (VSAOI)
  • Personal income tax
  • Corporate income tax
  • A business risk state fee

Latvian accounting requirements

Micro-enterprises should comply with the following regulations on accounting, which define specific requirements on accounting, depending on the legal form of micro-enterprises:

  • Accounting Act
  • Cabinet of Minister regulations adopted on 21 October 2003 “Accounting regulations and conduct”.

Microbusiness Tax is remitted to the State Budget on a quarterly basis. Microbusiness Tax return has to be submitted on or before the 15th day of the month following the quarter.

The Tax return should include the following information:

  • Turnover of a microenterprises in the quarter, which from the beginning of the year does not exceed 100,000 EUR
  • Turnover of a microenterprises in the quarter, which from the beginning of the year does exceed 100,000 EUR
  • The information about employees and their incomes
  • Calculated tax from a turnover, number of employees or salary of employee, which exceed criteria of micro-enterprise
  • Total calculated microbusiness tax

The Tax return also should include a legal form of micro-enterprise (individual merchant; fishing or agriculture; individual), as well as a name of a micro-enterprise and a registration number.

Why the accounting services are important?

Accounting services are aimed at not only ensuring compliance with the accounting laws, the purposes of accounting are much more. The most important purposes are listed below.

In supplying the accounting services the distinction should be made between management accounting and finance accounting.

Finance accounting primarily is aimed to ensure compliance with the legal requirements set by the laws in Latvia. According to the accounting laws in Latvia an entity should carry out the precise accounting of all transactions and should prepare the statements which would be available not only to the management or owners, but also tax authorities and any other third party. The management accounting aims to ensure the financial information required for decision-making.

Our accounting services in Latvia ensures the services (depending on a client’s needs) bot finance and management accounting.

The main role of accounting is performing and maintaining a systematic, accurate and complete recording all transactions performed by a company. Accounting records are the foundation of the accounting system. Primarily accounting is intended for the management of the company to analyse and  control of the business results.

The purpose of each company’s management is planning how to achieve the commercial goals in the circumstances of limited manpower, machinery and funding resources. Our accounting services in Latvia include the information required for management to prepare and control the budget. If necessary, we can help in modelling the  the budget, cost estimates and other elements of management accounting.

The accounting results helps in a number of decision-making processes and thus facilitates the efficiency of those business processes. The decisions which are based on accounting information may include, for example, the prices chargeable for the company’s goods or services and the costs required to procure necessary resources, funding, and business opportunities to undertake. Our accounting services in Latvia include not only recording the transactions, but also the financial analysis that will facilitate the support of taking the client business decisions..

The accounting results are used to evaluate the business. With accounting reports, company owners can determine how well the business works. Financial statements are a reliable source of measuring key performance indicators, so the company owners can measure their business over the long term and compare it with their competitors performance.

The financial statements created at the end of the accounting cycle reflect the financial position of the business on the relevant date. It shows how much capital (own and leveraged) has been invested, how much leverage the business has used, what profits or losses are, and the size of the company‘s assets and liabilities. The more professional accounting resources are used because the financial situation is more accurate and correct, leading to the professional use of accounting services contributing to the results of commercial activity (or at least to reflect them fairly).

One of the reasons for failure of small entrepreneurs is failure to manage money. Professional accounting services help you keep track of the company‘s liquidity (shortterm revolving funds/shortterm liabilities). Following such information reduces the risk of insolvency.

Accounting resources help business owners prepare not only historical financial data, but also business forecasts that can be used when applying for a business financing. Our experience alows not only ensure full compliance with Latvian accounting requirements, but also the requirements of the credit institutions in Latvia.

By establishing a variety of checks throughout the organization, accounting helps to avoid losses caused by theft, fraud, errors and mismanagement. Internal control protects the company‘s assets and allows it to avoid longterm losses.

The accounting services provider, as a neutral person, promotes internal function and the retention of assets.

What are your benefits by using our accounting services?

  • Cost savings as no need to pay taxes from accountant’s salary, as well as no need to provide office equipment, computer software licensing and accountant training
  • Guaranteed accountant services, which would be provided permanently regardless of the accountant change, vacation or other unplanned absence
  • Experience – our experts work with various companies of different areas, as well as accounting services are provided in close cooperation with certified tax consultants
  • Safety – our liability, while providing services, is insured

Ensuring cross-border accounting

We cooperate with companies, which provide accounting services and tax consulting in Estonia and Lithuania, thereby providing “one-stop agency” in Baltic countries. If it is necessary, in collaboration with an independent network providing accounting services, we provide high quality accounting services to most of the world countries.

Unlike companies which conduct business in integrated chains, our advantage is that we are not affiliated with a particular company in a particular country, but can optionally cooperate with the suitable company for customer satisfaction.

Prices for accounting services

Monthly prices for providing accountant services are determined individually for each client, depending on the industry of enterprise, the number of operations and degree of complexity of operations, the number of incoming and outgoing documents, and other factors. It should be noted that tax consulting for accounting clients are included with the accountant services.