Important news on CbC reporting for multi-national enterprises
Latvijas nodokļu ziņas latviešu valodā Jūs varat lasīt šeit: In Latvian

  Jānis Taukačs
Jānis Taukačs
Partner, Tax & Customs
  Kaspars Strazds
Kaspars Strazds
Associate, Tax & Customs
Dear clients and cooperation partners,

With Cabinet Regulations No.397 “On country-by-country reporting” adopted on 4 July 2017 (Regulations No.397) Latvia introduced the OECD BEPS project initiative on country-by-country reporting (CbC report) for multi-national enterprises (MNE). The OECD BEPS initiative has also been adopted by European Union Directive No.2016/881.

With CbC reports, every MNE must provide information on its activities in all jurisdictions where it operates and the CbC report must contain information for each such jurisdiction on MNE business and financial figures such as turnover, taxes paid, number of employees and intangible assets.

Regulations No.397 sets the playing field for MNEs in describing how, when and in what form CbC reporting should be done in Latvia. The most important requirements are:

  • CbC reports need be submitted only by a MNE with turnover exceeding EUR 750 million in the year before the year for which the CbC report is to be submitted.
  • The first CbC report must be submitted for the financial year (FY) starting after 1 January 2016 and covering 12 months.
  • The CbC report for FY 2016 must be submitted on or before 31 December 2017. For further financial years, CbC reports must be submitted within 12 months after the end of each FY. This means that for FY 2017 the CbC report must be submitted on or before 31 December 2018. After that date the State Revenue Service (SRS) sends the CbC report to all tax administrations participating in the CbC report information exchange.
  • Every qualifying MNE member in Latvia must notify the SRS on or before 31 August 2017 whether the Latvian entity will submit a CbC report for FY 2016 in Latvia or in another country which will later exchange it with the SRS. Notification should be filed via the SRS Electronic declaration system. For the following financial years, notification must be submitted on or before the last day of the FY.

The timeline for CbC reporting can be illustrated as follows:

CbC reports must be submitted by the ultimate parent company of a MNE located in the EU or in any other jurisdiction which will be exchanging CbC reports with Latvia for FY 2016. Only in the situations mentioned below may other group companies be delegated to submit a CbC report in their own countries:

  • the parent company need not submit a CbC report;
  • the country where the parent company is located has not concluded a treaty for CbC report information exchange;
  • the parent company need not submit a CbC report for a particular FY.

In these situations, if a Latvian entity is selected as the entity which mustsubmit a CbC report in Latvia, then CbC reporting will be in Latvia. Additionally, a MNE can select another entity to submit a CbC report instead of the parent company. In that case, the filing entity is called ‘the surrogate parent company’.

CbC reports must be submitted with the SRS via its Electronic declaration system by filling in a special template. The information must be in Latvian.

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