The Slovak Ministry of Finance (MoF) has issued new guidelines to determine the content of transfer pricing (TP) documentation, effective for the tax period starting after 31 December 2022.
The guidelines reflect an amendment to the income tax law that introduced the concept of a “significant controlled transaction.” Transactions value up to €10,000 are considered as “insignificant” under this law. Loans or credits are considered insignificant if the principal amount does not exceed €50,000. As per the TP rules the taxpayer does not have to include insignificant transactions in the TP documentation.
The guidance classifies the documentation into three categories:
- Full documentation: It includes a full set of TP documentation;
- Basic documentation: It reducing certain requirements but still relying on the equivalent of the Master File and Local File; and
- Short documentation: Only limited details required as per the annex.
The key changes in new guidelines are following:
- taxpayers with a revenue at least €49,790 for the last 12 months must prepare documentation;
- Under the new guidelines, documentation is not required for transactions that do not impact the income tax base of the taxpayer. However, an exception has been introduced for credit and loans, where the taxpayer must always prepare documentation; and
- The regulations includes the mandatory information in documentation for permanent establishments (PEs). In the case where a permanent establishment seeks to claim financing costs as a tax-deductible expense, the TP documentation must contain an explanation of the methods used for allocating capital and financing costs.
