Transfer pricing services

Inter-company transactions across borders are growing rapidly and becoming much more complex.



What is a transfer price?

A transfer price is a price applied in a transaction between related parties (two companies or a company and an individual).

A transfer price must be arm’s length, meaning it must match the market price that two independent entities would apply in a similar transaction under the same or similar (comparable) conditions.

Applying transfer pricing rules helps ensure that:

  • the related companies (including persons resident in different countries within the group) do not shift their profits to a jurisdiction with a more generous tax regime, and that one and the same income is not taxed twice
  • two or more Latvian companies (including persons) within the group do not shift their profits to a company that might be enjoying tax relief or tax loss brought forward.



Tax authorities are keeping a closer eye on the growing number of cross-border, inter-company transactions, imposing stricter penalties and new documentation requirements. 

Complying with these requirements can be complicated and time-consuming. So every multinational company needs to have a coherent and defensible transfer pricing policy grounded in the very real climate of change in which they are operating.

By considering transfer pricing carefully, you will be able to:

  • better manage risks 
  • improve operational and financial performance 
  • prepare for sustainable growth

Aligning your transfer pricing policy with your goals

We can help you embed your transfer pricing policy within your wider business strategy by:

  • Designing tax-optimised business models (including value chain transformation analysis and implementation)
  • Intellectual property planning
  • Obtaining tax rulings and advance pricing agreements
  • Drafting transfer pricing documentation based on the OECD Guidelines
  • Tax audit assistance



PwC’s transfer pricing services are designed to be consistent with international practice and Latvian statutory requirements and tailored to each client’s individual needs.

Transfer pricing risk evaluation is an assessment of related-party transactions aimed at identifying tax risks. This involves evaluating the transaction, the transfer pricing methods applied, and relevant documents such as contracts, invoices and accounting policy.


  • include identifying transfer pricing risks and measuring your exposure to prepare your company for a potential tax audit by the tax authorities.

Transfer pricing documentation is a file supporting your related-party transactions to help you defend your arm’s length prices in the event of a dispute with the tax authorities.


  • Determining and supporting your arm’s length prices
  • A defence document in the event of a tax audit
  • The findings can also be used in the event of a dispute with your related parties, minority shareholders, or lawfully interested third parties.

Benchmarking studies aim to measure the arm’s length level of prices or profits in transactions between unrelated companies. Data searches will use your company’s internal data and international commercial databases such as AMADEUS.


  • A benchmarking study is usually part of the full documentation. However, if your related-party transactions are straightforward and do not require a comprehensive analysis, or if you choose to prepare the analysis on your own, then PwC will offer to carry out only a benchmarking study supporting your arm’s length prices.

Advance pricing agreements can be signed with the tax authorities to determine the arm’s length price of a particular transaction or type of transaction that exceeds or will exceed €1.43m a year.


  • An advance pricing agreement helps the taxpayer mitigate transfer pricing risk because during a tax audit the tax authorities cannot reject any of the transfer pricing methods the taxpayer has applied under that agreement.

Unlike documenting the prices of existing transactions, the purpose of devising a transfer pricing policy is to make plans for future transactions or restructure existing transactions. For example, transfer pricing policy planning can include:

  • a functional analysis of the proposed transactions,
  • selecting an appropriate transfer pricing method,
  • suggestions for setting price levels,
  • recommendations for preparing legal documents.


  • Planning and documenting tax-compliant transactions will help avoid issues and disputes with the tax authorities in the future.
  • Your transfer pricing policy can later serve as a document supporting your arm’s length prices if your transactions are in line with that policy.

Changes to the business environment force groups to restructure from time to time. Restructuring can have various goals such as saving cost or improving performance. However, transfer pricing should be considered in any group restructuring. Examples of restructuring goals include:

  • setting up a shared service centre, for example, to centralise marketing or finance functions
  • splitting off core functions or risks (e.g. the cross-border transfer of a production facility)
  • hiving off intellectual property into a special-purpose company.

Depending on your particular aims, PwC will offer to design a tax-effective group structure, make transfer pricing plans for your intragroup transactions, and provide tax and legal advice to help you implement the new structure.

In tax practice the form of a transaction frequently matters more than the substance, and so it is crucial to prepare basic transfer pricing documents such as contracts and invoices correctly.

PwC’s offerings include:

  • preparing a contract or any part of it according to transfer pricing requirements
  • drafting special agreements such as a cost sharing agreement
  • making recommendations for preparing contract appendices, invoices and other documents.

PwC has experience of representing clients in dealings with the tax authorities. For example, PwC can draft a transfer pricing document supporting certain transactions, prepare answers to any questions the tax authorities might ask during a tax audit, take part in your final tax-audit discussions with the tax authorities, and appeal to the Director General of the State Revenue Service and to the courts against any unfavourable decisions.

Contact us

Tatjana Koncevaja

Transferpricing Director, PwC Latvia

Tel: +371 67094400

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