Latvia: Transfer pricing documentation requirements apply for 2018

21 December 2018

New requirements for Latvian transfer pricing documentation are applicable to related-party transactions conducted in 2018.

The requirements for transfer pricing documentation—including Master file and Local file reporting—apply for entities with related-party transactions that satisfy certain thresholds. Under the revised requirements for transfer pricing documentation, there will be more extensive reporting of information about the taxpayer group as well as the local company. The new measures require that the mandatory transfer pricing documentation must be prepared and submitted to the tax authorities within 12 months after the financial year-end, as follows:

  • Master file and Local file—required if the sum of the amount of controlled transactions exceeds €15 million, or if the sum of the amount of controlled transactions exceeds €5 million and annual turnover exceeds €50 million
  • Local file only—required if the sum of the amount of controlled transactions exceeds €5 million; still, the tax authorities may request that a Master file be prepared (to be submitted in one month’s time upon request)

Otherwise, if the sum of the amount of controlled transactions is at least €250,000 but less than €5 million, the transfer pricing documentation must be prepared according to the 12-month rule and must be submitted to the tax authorities within one month of being requested.

Penalties for noncompliance with the documentation rules may be imposed for up to 1% of the value of the controlled transactions, for a maximum €100,000 penalty. 

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