Transfer Pricing News - Slovakia: New developments in Transfer Pricing in Slovakia

The Income Tax Act (ITA) has brought about a number of important changes that affect transfer pricing. In connection with the amendment to the OECD Transfer Pricing Guidelines in July 2010, the amendment to the ITA has abolished the hierarchy of transfer pricing methods. This means that, with effect from 1 January 2014, traditional transactional methods based on price comparison have not been given preference over other methods. The Slovak Financial Directorate has issued a methodological guideline on the application of transfer pricing methods.

In addition, the definition of ‘foreign dependent person’ has been extended and is deemed to also include the relationship between permanent establishments of taxpayers related by capital or management or the relationship between a taxpayer’s permanent establishment with another taxpayer related to that taxpayer. It should be added that the amendment to the ITA has also introduced the definition of ‘service’ permanent establishment.

Requests for approval of transfer pricing methods must be filed within a period of at least 60 days before the beginning of the period in which the method requested for approval is to be applied. If a decision approving the method is issued by the tax administrator, it may not be appealed. From 1 September 2014, the requests will be subject to a charge: the fee will be 1% of the transaction amount for unilateral approvals but no less than € 4,000 and no more than € 30,000. The fee for bilateral or multilateral approvals will be 2% of the transaction amount but no less than € 5,000 and no more than € 30,000.

Another material change concerns the imposition of an obligation on the taxpayer to present transfer pricing documentation at the request of the tax administrator within 15 days of delivery of the request.


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