Europe is moving towards a fully digitalized information infrastructure, with the European Union set to launch the European Single Access Point (ESAP) in July 2027.
The ESAP will serve as a central data portal providing unified access to publicly available financial and sustainability information on European companies, capital markets, and investment products. This initiative aims to increase the visibility of European firms to both domestic and international investors and broaden access to diverse funding sources.
The move reflects a broader trend towards digitization across the European information landscape, a shift that is becoming increasingly unavoidable. The ESAP will initially focus on reports from regulated financial entities, with plans to gradually incorporate annual reports and sustainability disclosures from a wider range of companies.
Latvia has already begun preparations for the ESAP launch, with the Saeima (Parliament) recently approving amendments to the Accounting Law in late February to establish the legal framework for transmitting Latvian company information to the platform. The initial focus will be on annual reports submitted by entities subject to the Sustainable Information Disclosure Law, as well as disclosures related to payments made to government authorities by companies involved in extractive industries or primary forestry.
However, a key decision regarding which Latvian state structure will be responsible for collecting, validating, and submitting the data to ESAP has been deferred until October 2027. The State Revenue Service (VID) and the Enterprise Register (UR) are currently considered the most likely candidates, based on the existing system.
The ESAP is a crucial component of a larger digital reporting ecosystem designed to streamline data exchange between EU member states. The EU, functioning as a single market, requires a harmonized information management system, built on three core elements:
- A regulatory and methodological framework – defining the reasons for information disclosure, taxonomies specifying what is disclosed (such as the ESRS XBRL taxonomy for sustainability reporting), and technological guidelines outlining how information is disclosed.
- A centralized technical infrastructure and unified data platform – the ESAP itself.
- Data transparency, data usage, and access management – fostering trust in the data among information users.
Implementing ESAP can be likened to completing the roof on a house, bringing the EU’s digital reporting ecosystem closer to completion. However, significant perform remains in building out the entire infrastructure, a task that falls to member states, their companies, and auditors.
The initiative is driving a shift towards the apply of Inline XBRL (iXBRL) as the standard reporting format across the European Union. Following the lead of countries like Denmark, the Netherlands, and Spain, Finland announced this year that it will also transition to iXBRL for financial reporting. This trend is fueled by both the ESAP initiative and EU directives aimed at expanding and improving the use of digital tools and processes in corporate reporting to enhance transparency throughout Europe.
Under the Sustainable Information Disclosure Law, sustainability reports, which are part of the management report in annual accounts, will need to be submitted to the VID in a unified electronic format (European Single Electronic Format – ESEF), technically in iXBRL format, starting in 2028. This means the responsible structure will need to ensure a dedicated iXBRL file validation system is in place.
Currently, companies listed on the stock exchange already submit their consolidated annual reports in iXBRL format. As Latvia integrates into the EU’s digital reporting ecosystem and adapts its IT infrastructure to accommodate machine-readable data requirements, the use of iXBRL is expected to expand to include annual reports from other companies, mirroring developments in countries like Finland, and Denmark.
While the technology for iXBRL reporting is readily available, the primary challenge lies in developing the necessary expertise. There is currently a tendency to over-rely on technology and artificial intelligence, while lacking sufficient knowledge at the intersection of regulatory requirements, technical aspects, financial (IFRS) and sustainability (ESRS) standards, and the digital format (iXBRL). What we have is an area where both report preparers and auditors need to develop their skills.
The transition to iXBRL reporting is not merely a technology project; it’s a competency project that often requires a renewed understanding of corporate information management. The European Single Access Point project and the recent amendments to the Accounting Law, which may initially seem insignificant to Latvian businesses, could ultimately lead to substantial changes for accountants preparing annual reports, auditors verifying the digital format, and company managers planning budgets and submission deadlines.
* Inline XBRL (iXBRL) is a machine-readable and human-readable open data format that embeds XBRL within an HTML structure, allowing for easy creation of contextual information and report visualization, as well as working with big data.
