Latvia’s State Revenue Service has published guidance on controlled transaction reports, covering filing requirements, EUR 250,000 reporting thresholds, transaction classification, transfer pricing methods, documentation, and penalties for non-compliance.
Latvia’s State Revenue Service (SRS) updated its corporate income tax guidance page on 18 September 2026 with new Guidelines on completing controlled transaction reports.
The guidelines detail the mandatory requirements, specific filing deadlines, Q&As, examples for corporate taxpayers, and criteria for identifying related-party transactions, including exemptions for thresholds under EUR 90,000. Furthermore, the document offers practical instructions on determining transaction values, handling Value Added Tax, and utilising specific classifications or the “Other” category when standard definitions are unavailable.
Latvia’s controlled transactions reporting requirement took effect on 1 January 2026 and applies to transactions in fiscal years beginning on or after 1 January 2025.
Resident companies and non-resident permanent establishments subject to corporate income tax must file reports electronically through the SRS Electronic Declaration System (EDS), using the prescribed template or an XML file. The requirement covers transactions with related foreign entities or individuals and entities or persons in listed low-tax or no-tax jurisdictions.
Reporting thresholds & materiality rules
Latvia requires controlled transaction reports when the total value of controlled transactions exceeds EUR 250,000 in a reporting fiscal year. Transactions with an individual partner of EUR 90,000 or less generally do not need to be reported. If each partner’s transactions remain within EUR 90,000, no report is required even when the overall threshold exceeds EUR 250,000. Reports must be filed electronically within 12 months after the end of the fiscal year.
Content and structure of the report
For each reportable controlled transaction, taxpayers must provide structured information on the transaction partner, transaction type and direction, and total amount. Amounts must be reported excluding VAT and based on the revenue or expenditure recorded in the accounts. The report must also detail the transfer pricing methodology, including the method used, comparable data source, tested party, market indicators, benchmark range or value, and the actual price, rate, or financial indicator applied.
Practical guidance & special reporting rules
- Transaction classification: Taxpayers should use the “Other” (Cits) classifier when predefined categories do not cover a transaction type or value indicator, such as share transfers or currency exchanges. A description of up to 50 characters must be provided, and the classifier should not be used as a general catch-all. The transaction’s economic substance must be clearly described.
- Transfer pricing methods: Reports may use only the five statutory transfer pricing methods prescribed under Latvian regulations. Where techniques such as Discounted Cash Flow (DCF), expert valuations, or combined methods are used, taxpayers must identify the primary underlying statutory method, typically the Comparable Uncontrolled Price method.
- Grouping of transactions: Homogeneous transactions involving the same partner and direction may be aggregated into one entry, such as recurring management fees or freight forwarding invoices. However, transactions with opposite directions, such as purchases and sales, cannot be netted and must be reported separately.
- Portfolio approach: Where multiple partners have the same functional profile and are assessed using the same benchmark, each partner must still be reported separately. The relevant indicator ranges should remain consistent where the same benchmark is applied.
- Financial transactions: For variable-rate loans, such as EURIBOR plus a margin, the report should include the total effective interest rate at commencement. For multiple financial transactions with different rates, taxpayers may report an arithmetic average rate, while providing the detailed rates and supporting information in the local transfer pricing documentation.
- Third-party cost recharges: Third-party cost recharges should be classified using “External comparable data”, with the applicable profit markup reported as 0, or as a 0 to 0 range.
Domestic chain transactions, documentation & penalties
- Domestic chain transactions excluded: Domestic chain transactions (transactions with a related resident linked to a related foreign entity within a single supply chain) are not reported in the Controlled Transactions Report.
- Alignment with local file: Information submitted in the report must strictly reconcile with accounting records and local transfer pricing documentation.
- Penalties for non-compliance: Late submission or failure to provide essential information preventing arm’s-length verification can incur fines of up to 1% of the controlled transaction value, capped at EUR 100,000.
