On 1 December 2021 the text of Directive (EU) 2021/2101 (of November 24, 2021) introducing “public” country-by-country (CbC) reporting for certain undertakings and branches was published in the Official Journal of the EU. Public CbC reporting applies to multinational groups operating in the EU with a total consolidated group revenue of at least EUR 750 million.

In essence, CbC is a report where large multinationals have to provide a return that breaks down key elements of the financial statements by separate entities/jurisdictions. A CbC report provides local tax authorities visibility to revenue, income, tax paid and accrued, employment, capital, retained earnings, tangible assets and activities. The Directive will require certain multinational undertakings with revenue of more than EUR 750 million to disclose publicly in a specific report financial data currently not visible to the public.

The directive enters into force on 21 December 2021. EU Member States have 18 months to implement and transpose the directive into domestic law. Following this, the public CbC rules will be effective. The deadline for transposition by the EU Member States is 22 June 2023, and the rules are applicable from June 2024 (that is, they would apply with respect to financial years starting on or after June 2024). For calendar year taxpayers, the first reporting year will be financial year 2025, and the report will be due by the end of December 2026.

Despite the fact that there are not many Latvian based groups of companies qualifying for CbC report submission, companies that are part of a multinational group and located in Latvia still will be included in a CbC report submitted by the responsible entity of the group. 

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Kaspars Banders, Senior Manager, Tax, KPMG in Latvia