Recent amendments to the Annual Reports and Consolidated Annual Reports Law have introduced significant changes affecting companies' reporting requirements starting from 2024. Here's what business owners and accountants need to know.
New Monetary Thresholds: The Biggest Impact
The most significant changes involve increased monetary thresholds for company categorization, primarily due to high inflation rates in 2021-2022. According to Eurostat, total inflation in the Eurozone reached 24.3% between January 2013 and March 2023, leading to approximately 25% increases in threshold values.
New Categories for Small Companies
A small company (not qualifying as a micro-enterprise) must not exceed two of these three criteria for two consecutive years:
- Balance sheet total: €5,000,000 (previously €4,000,000)
- Net turnover: €10,000,000 (previously €8,000,000)
- Average number of employees: 50 (unchanged)
Audit Requirements
The thresholds for mandatory limited review and audit requirements have also increased:
Limited Review Requirements (for small companies exceeding two of three criteria):
- Balance sheet total: €500,000 (previously €400,000)
- Net turnover: €1,000,000 (previously €800,000)
- Average number of employees: 25 (unchanged)
Full Audit Requirements (for companies exceeding two of three criteria):
- Balance sheet total: €1,000,000 (previously €800,000)
- Net turnover: €2,000,000 (previously €1,600,000)
- Average number of employees: 50 (unchanged)
Important Implementation Note
For 2024 annual reports, companies must apply:
- New thresholds for the 2024 reporting year
- Previous thresholds for the 2023 comparison year
Sustainability Reporting Requirements
The new SIDL introduces sustainability reporting requirements for:
- Large companies and parent companies of large groups
- Medium and small companies (except micro-enterprises) with securities traded on regulated markets
- Certain large subsidiaries and branches meeting specific criteria
Implementation Timeline:
- 2024: Large public-interest entities with over 500 employees
- 2025: All other large companies
- 2026: Small and medium-sized companies with securities traded on regulated markets
New Requirements for Intangible Resources
Companies must now provide enhanced reporting on intangible resources not recognized as intangible assets on the balance sheet. This requirement applies to large companies and those with securities traded on regulated markets (except micro-enterprises).
Publication Requirements
Companies required to prepare sustainability reports must publish their annual reports and consolidated annual reports (if applicable) on their websites immediately after submission to the State Revenue Service.
Practical Implications
These changes will significantly impact Latvian businesses, particularly in terms of:
- Reduced administrative burden for some companies now falling into different categories
- New sustainability reporting obligations for larger entities
- Enhanced transparency requirements regarding intangible resources
- Electronic reporting format requirements for sustainability reports
According to the State Revenue Service, these changes will affect approximately 9 large public-interest entities in 2024, 250 large companies in 2025, and an additional 10 small and medium-sized listed companies in 2026.