What is the Report on Controlled Transactions?
The Report on Controlled Transactions (CTR) is one of the transfer pricing documentation documents. Its essence is simple: it is a data report in which a company lists its transactions with related parties and indicates how it determined the price of these transactions.
It is important to understand that the report is not an analysis and is not a justification for the price. A company justifies the compliance of the price with the market price in its local transfer pricing documentation; the CTR is a set of data that allows the State Revenue Service (SRS) to identify these transactions and link them to the local documentation. Therefore, the information included in the report must be sufficient for the transaction to be recognized and verified.
How the report fits into transfer pricing documentation
Transfer pricing documentation generally consists of master file (global documentation), local file (local documentation), the report on controlled transactions, and the country-by-country report for the multinational enterprise group.
The requirements entered into force on January 1, 2026, and apply to controlled transactions implemented starting from the reporting year that begins during the 2025 calendar year. Practically, this means: for most companies, the first reporting year for which the report must be prepared is 2025.
Who must submit the report?
The obligation applies to a CIT payer — a resident or a permanent establishment of a non-resident — that conducts transactions with:
- a related foreign company;
- related natural persons;
- other commercial companies or persons if they are located, established, or founded in low-tax or no-tax countries or territories.
In the methodological material of the SRS, the scope of preparers also includes so-called chain transactions with a related resident party — if these transactions, based on the functions performed, risks assumed, and assets used, are economically linked to this person’s transactions with a related foreign company.
Whether a person is related is determined by Article 1, Paragraph 18 of the Law “On Taxes and Duties.” The main cases are: parent and subsidiary commercial companies; participation from 20 to 50 %; more than 50 % of capital held by the same person and their relatives up to the third degree; majority of votes in management boards; as well as agreements on additional remuneration not provided for in the contract or coordinated actions to reduce taxes.
When is the report required?
The report must be prepared and submitted if the total amount of controlled transactions in the reporting year exceeds 250 000 euros. Individual transactions may be excluded from the report if their total value with a specific transaction partner in the reporting year does not exceed 90 000 euros.
Submission deadline: why 31 December 2026 matters
The deadline is 12 months after the end of the respective reporting year. The report is submitted electronically via the EDS (Electronic Declaration System).
For those companies whose reporting year coincides with the calendar year, the first reporting year is 2025, ending on December 31, 2025. Thus the first submission deadline is December 31, 2026.
This means that companies with a calendar reporting year now have the final opportunity to prepare the report in a calm manner. Two months may sound like a lot, but the work does not begin with the form, but with the data: first, all transactions with related parties for 2025 must be extracted from the accounting records, categorized by type, and reconciled with the local TP file. If the local TP file is not yet ready or if the methodology within it has been changed, the report data will not be able to correspond to it.
Key points to check before submitting
- The report must specify the transaction type, direction, total amount, and the counterparty; the transfer pricing (market value) determination method used; the source of comparable data, the tested party, the market price, the selected transfer pricing indicator, and the applied ratio.
- The transaction price is indicated excluding value-added tax and must correspond to the revenue or expenses recognized in the accounting records. Uniform transactions with a single partner may be grouped and aggregated for the entire reporting year rather than presented by individual invoices; for loans, the value is the principal amount plus recognized interest payments.
- The transaction type is determined by the economic substance of the transaction, not its legal form, and a single contract may contain several economically distinct controlled transactions.
- Low value-adding services. For these services, specifying the transfer pricing determination method is not mandatory. They are characterized by their supportive nature, the fact that they do not form part of the group’s core business, the non-use of unique and valuable intangible assets, and the non-assumption of significant risks; their market value is formed by the attributable costs plus a 5% markup.
- It must be ensured that all controlled transactions meeting the criteria set out in regulatory enactments have been identified, that the report data corresponds to the accounting records, is mutually reconciled with the local file, corresponds to the economic substance of the transaction, and that no information required by regulatory enactments has been omitted.
Penalties for late or incomplete reports
- If the submission deadline is not met or if the transfer pricing documentation does not include essential information required by regulatory enactments, the SRS may impose a fine of up to one percent of the amount of the controlled transaction, but not exceeding 100 000 euros.
What has changed from 2026
If the situation affecting the transfer pricing methodology has not changed significantly, the local transfer pricing documentation may be reviewed and updated once every three years, with the exception of the tested party and previously accepted financial indicators of comparable data, which must be updated annually; at the same time, the threshold for a significant transaction for the reporting year has been raised from 20 000 to 90 000 euros.
Keep your transfer pricing reporting audit-ready
Preparing the report requires reliable transaction data that is consistent with your local transfer pricing documentation. If you have any questions, please do not hesitate to contact Leinonen Latvia Tax & Legal team.
