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Controlled Transaction Reports in Practice: 4 Errors the SRS Will Spot First

In recent years, transfer pricing regulation in Latvia has gradually shifted away from formal document checks toward evaluating the economic substance of transactions. Recent amendments to Section 15.² of the Law on Taxes and Duties clearly reinforce this direction: the State Revenue Service (SRS) will receive structured information regarding transactions with related parties, which the […]

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What are transfer prices and which companies do they apply to?

Companies often believe that transfer pricing does not apply to them, as it is only applicable to large multinational corporations. However, in reality, transfer pricing affects significantly more companies than it might initially seem. Transfer prices are the prices at which related companies trade with each other. Transfer pricing regulation exists at the level of

What are transfer prices and which companies do they apply to? Lasīt vairāk »

New guidelines for assessing tax risks when an employee works remotely from abroad

Cases where an employee works remotely from another country have become commonplace, but for companies, this flexibility can create a permanent establishment (Eng.: permanent establishment or “PE”) with all the resulting tax consequences. Recently, the Organisation for Economic Co-operation and Development (OECD) published new guidelines for assessing the risk of permanent establishment (PE) in cases

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Amended Thin Capitalization Rules

The Saeima has approved amendments to the Corporate Income Tax Law, revising the so-called “thin capitalization rules”. Latvia has thin capitalization rules (thin cap rules) in force, which must be considered when attracting financing in the form of loans, as in certain cases they limit the recognition of interest payments as deductible expenses for tax

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Why must the price comply with the arm’s length principle?

Transfer pricing has long affected not only international groups but also local companies. They have become a daily reality for Latvian businesses, especially in cases where a company cooperates with related parties: subsidiaries, board members, ultimate beneficial owners, relatives of officials, or foreign partners belonging to the same group. The arm’s length principle is one

Why must the price comply with the arm’s length principle? Lasīt vairāk »

When transfer pricing documentation becomes mandatory and what it means in practice

Transfer pricing often becomes relevant only when a company is suddenly asked for its justification or when the SRS sends a letter with questions about transactions with related parties. However, the law has long established when documentation is mandatory, when it must be submitted upon request, and when a simplified justification is sufficient. An important

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New obligation for companies – controlled transaction report becomes mandatory

Yesterday, the Saeima passed amendments to Section 15.² of the Law “On Taxes and Duties” in the third reading, significantly changing the transfer pricing documentation procedure. Henceforth, companies engaging in transactions with related parties will be required to submit a controlled transaction report to the State Revenue Service. What is changing? Until now, companies could

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Report on Controlled Transactions – a New Burden, Not an Improvement in Transfer Pricing

The draft law, which intends to supplement Section 15.2 of the Law “On Taxes and Duties” with a new Paragraph 9¹, is currently being considered in the second reading by the Saeima. Given the current pace of progress and the support of the responsible Budget and Finance (Tax) Committee, the adoption of these changes is

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Expanded Prohibitions and New Obligations for Crypto-Asset Service Providers

2025. On October 23, the European Union adopted the 19th sanctions package, which significantly expands restrictions on crypto-asset transactions and payment services. The changes affect both the financial sector and the digital asset market, making circumvention of sanctions using crypto-assets almost impossible. Below, we will examine the main aspects of the new sanctions package, its

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Amending VAT Application Rules for Imported Goods in Distance Selling Transactions

As of 2025, European Union Directive 2025/1539 has entered into force, introducing amendments to the procedure for applying value added tax (VAT) to distance selling transactions involving imported goods. These amendments concern the so-called Import One-Stop Shop (IOSS) regime, which aims to simplify and harmonize VAT administration in cross-border e-commerce transactions. Before delving into a

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