This article describes the principles of planning dividends and shaping the tax-effective shareholding structure for Latvian companies. More than a year has passed since the entry into force of the new Corporate Income Tax Act on 1 January 2018 and questions have piled up about not only distributing  “old” profits but also “new” profits into dividends. [...]

As of 1 January 2019 Latvia has introduced controlled foreign company rules by amending the Corporate Income Tax Act. According to the rules a Latvian company has to apply the controlled foreign company rules, if it: has qualifying holding in the foreign company (or has a permanent establishment abroad), and the above foreign company has [...]

Intangible assets revaluation Question: Latvian company A has sold a trademark to another Latvian related company B. Company B has licensed back to A the rights to use the trademark. The arm’s length value of the trademark was assessed using a discounted cash flow analysis. After a couple of years, it appears that the sales of [...]

On 25 October 2018 the long-awaited amendments to the Taxes and Duties Act regarding the transfer pricing documentation requirements were finally passed. The amendments were necessary to incorporate the revised standards for transfer pricing documentation required by the Economic Cooperation and Development (OECD) Base Erosion and Profit Shifting (BEPS) plan (Action 1) into the domestic [...]

On 15 June 2017, the Saeima adopted comprehensive amendments to the Commercial Law (these amendments entered into effect on 13 July 2017), which, inter alia, also governs matters regarding employee stock and personnel options. Employee stock Section 255 of the Commercial Law has been reworded; furthermore, the definition of employee stock has changed significantly. I [...]

Associated companies frequently issue loans to each other, which must, like other transactions between associated companies, conform to market value. Currently, this issue has received additional topicality due to the fact that interest payments that exceed their market value are considered to be equivalent to dividend payments. This means that the issue of determining the [...]