Worldwide transfer pricing reference guide 2014

Slovak Republic (continued)
Documentation requirements (continued)
For taxpayers obliged to use IFRS (banks, insurance companies, pension funds, companies exceeding a certain size), the Guidance
prescribes the required contents of the transfer pricing documentation, which is generally in line with the Masterfile approach set
out by the EU Code of Conduct on Transfer Pricing Documentation. The documentation should consist of global (Masterfile) and local
documentation. The Masterfile has to contain information with regard to the whole group of related parties (overview of the industry,
business strategies and general overview of functions, risks and assets of the members of the group). The local documentation should
contain information regarding the Slovak taxpayer. Moreover, the approach to transfer pricing methods used, and description of
transactions with related parties should be covered by the documentation. The local documentation should also include analysis of the
comparability of the transactions.
For other taxpayers, the Guidance does not stipulate the contents of the documentation. However, the transfer pricing documentation
must prove that prices applied in related party transactions conform to the arm’s length principle.
The language of the documentation should be Slovak, unless otherwise approved at the taxpayer’s request. The tax authorities have
stated that documentation presented in English, German or French should also be accepted. There is positive experience with submitting
documentation in English.
It is not clear from the Guidance whether the documentation requirements apply for transactions performed or contracts concluded
prior to 1 January 2009. However, the tax authorities already require taxpayers to have sufficient transfer pricing documentation
prepared in the case of a tax audit. This stems from the provision of the Income Tax Act stipulating that the burden of proof rests with
the taxpayer.
Documentation deadlines
If requested by the tax authorities, transfer pricing documentation must be submitted within 15 days of the request. The documentation
does not have to be disclosed unless requested by the tax authorities. As of January 2014, submission of documentation may be
required without opening a tax audit prior to the request.
Statute of limitations on transfer pricing assessments
The statute of limitations in Slovakia in the case of applying a double tax treaty is 10 years from the end of the year in which the tax
return is filed.
Return disclosures/related party disclosures
Transfer pricing documentation does not need to be enclosed with the tax return. The taxpayer should state (on a specific row of the
tax return) the difference (if any) between the prices charged in transactions with related parties and the arm’s length prices that
decreased the tax base. The tax base must be at the same time increased by this difference.
The corporate income tax return includes a summary table where the amounts of various types of related party sales and purchases
must be stated (regardless of whether there are divergences from arm’s length prices).
Transfer pricing-specific returns
There are no transfer pricing-specific returns in Slovakia.
Frequency of tax audit and transfer pricing scrutiny by the tax authority
In general, the likelihood of a corporate income tax audit in Slovakia is high, while the likelihood that the taxpayer’s related party
transactions will be reviewed as part of that audit is medium to high.
Based on experience with transfer pricing audits in Slovakia, if transfer pricing is reviewed as part of the tax audit, the risk of a challenge
by the Slovak tax authorities to the taxpayer’s methodology is also medium.
Following the introduction of the obligation to prepare and keep transfer pricing documentation, the tax authority has intensified its
activity in the area of transfer pricing and is increasingly focused on the transfer pricing and related documentation when auditing
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