The Transfer Pricing rules regulate - for tax purposes - the prices charged in the intercompany transactions. The main goal is to maintain the arm´s length principle.
General transfer pricing rules have been implemented in Slovak legislation even before 2001, however, only in 2001 specific methods of application of arm´s length principle were introduced by Slovak Income Tax Act.
The obligation to keep the transfer pricing documentation became effective on 1 January 2009. Starting January 1st, 2015 this obligation applies not only to foreign related parties but to domestic related parties, as well. Pursuant to the Slovak tax legislation, all related parties are obliged to prove the method applied for setting the prices of controlled transactions (domestic or cross-border) between related parties and keep a relevant documentation justifying this method.
In the recent years the number of tax inspections on Transfer Pricing rapidly increased, that is why we recommend to focus on this area and especially on preparation of the proper Transfer Pricing documentation. In this regard, our experts have prepared an useful 2017 Transfer Pricing Overview for Slovakia, having as main topics:
Applicable Transfer Pricing legislation for Slovakia
Applicability of arm´s length principle
Transfer Pricing documentation
Obligation to keep the documentation
Transfer pricing methods (based on comparison of prices or comparison of profits)
Advance Pricing Agreements
If you need more information or professional advice, please contact our tax and legal experts in Slovakia, who will gladly offer you the necessary support in any Transfer Pricing matters.