Latvia: local rules

Latvia has no single transfer pricing act. The market price (arm's length) rules sit in the Law on Taxes and Duties (Likums "Par nodokļiem un nodevām"), where s. 15.2 covers transfer pricing documentation, and in the Corporate Income Tax Law, which taxes a price correction between related parties as a deemed distribution of profit. Latvia taxes distributed profit at 20% of the gross amount (20/80 of the net), not annual profit. Detailed content rules are in Cabinet Regulation No. 802 of 18 December 2018, and the pricing methods are in Cabinet Regulation No. 677 of 14 November 2017. The Law on Taxes and Duties was changed by a law passed on 6 November 2025 and in force from 1 January 2026.

Corporate income tax payers with controlled transactions must prepare local documentation if those transactions exceed EUR 250,000 in the reporting year, and global documentation (master file) if they exceed EUR 20,000,000 (EUR 15,000,000 before reporting year 2025). Both are prepared within 12 months after the reporting year end. Since reporting year 2025 they go to VID only on request, within 30 days, and only transactions of EUR 90,000 or more per type are analysed. A new Controlled Transactions Report is due in the VID Electronic Declaration System within 12 months after year end for taxpayers above EUR 250,000. Benchmarking can be refreshed every 3 years, with yearly financial updates. Local files may be in Latvian or English.

Latvia follows the OECD methods: comparable uncontrolled price, resale price, cost plus, transactional net margin and profit split, with the most appropriate method chosen (Cabinet Regulation No. 677 of 14 November 2017, per secondary sources). A simplified approach exists for low value-adding intra-group services (Regulation No. 677 as amended in 2019, with documentation content in Cabinet Regulation No. 802 of 18 December 2018). Unilateral advance pricing agreements with VID are available for a fee under Regulation No. 802.

For missing, late or non-compliant transfer pricing documentation or Controlled Transactions Report, VID can fine up to 1% of the controlled transactions, capped at EUR 100,000 (s. 15.2(14), per KPMG Latvia). VID has applied the maximum fine for documents that did not meet the content rules. Price corrections are taxed as deemed distributions at 20/80, and transfer pricing can be audited for up to five years.

Latvia passed its Global Minimum Tax Law on 6 June 2024 (in force 21 June 2024) but used the EU Article 50 option to delay the IIR and UTPR for six years, and it has no QDMTT. The law only requires a Latvian ultimate parent to appoint a filing entity in another country, and requires Latvian group entities to give that entity the information it needs within 12 months after the reporting year end. There is no Latvian top-up tax return and no Latvian GloBE filing date beyond that information duty.

Because Latvia taxes distributions, there is no annual corporate income tax return. Companies file a monthly return by the 20th of the next month when a taxable item arises, and always for the last month of the reporting year, which also carries the year's annual items such as transfer pricing adjustments. Payments are due by the 23rd of the month through the single tax account, and from 1 January 2026 a payment date that falls on a weekend or holiday moves to the next working day (Law on Taxes and Duties s. 29(3.1)); the law says this for payments only, not for returns. A CbC report is due within 12 months after year end for groups above EUR 750m, and a notification by the last day of the reporting year. VID can audit transfer pricing for up to five years.