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Global transfer pricing guide

Transfer pricing - Slovakia

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Introduction to transfer pricing in Slovakia
Transfer pricing rules
  • The Slovak transfer pricing (TP) legislation is based on Act. No. 595/2003 (Sections 1(2), 2 n-r/ ab, ad, Sections 17/5, 17/6, 17/7, 18 and 18a) on Income tax, which is the fundamental national law regulating the transfer prices between related parties.

  • The Act on Income tax specifies which entities are considered as a related party, generally they have direct or indirect ownership of at least 25 percent based on voting rights, share capital and common control. The Slovak legislation considers as related parties also those persons who are participating in the statutory bodies, supervisory bodies or other similar bodies of a legal person or entity, as well. Additionally, the shares of close persons are combined, and if the total of the shares of close persons is at least 25%, the respective entities are considered as a related party. Related parties are also legal persons subject to consolidation.

  • Guidelines Nr. MF/020061/2022-724 of the Ministry of Finance provides a guideline to the content of the transfer pricing documentation that would be used between independent persons in comparable relationships.

  • In case that a taxpayer does not have prepared benchmark analysis proving that the prices agreed within related party transactions are within interquartile range and thereofore considered as being arm´s length, in case of tax audit, the Slovak tax authority shall prepare its own benchmark analysis and assess a margin up to median. In this case, the Slovak tax authority imposes tax based on the difference between the price agreed within related party transaction and median resulting from the benchmark analysis.

  • The place of taxation of the related parties is defined in Double Tax Treaties. 


  • The Slovak transfer pricing guidelines follow the OECD principles, whereas OECD Master File and Local File concept are the best practices in Slovakia. It should be noted that according to the amendment of the Act on Income tax effective as of 1.1.2023 the OECD transfer pricing guidelines should be used for the purposes of transfer pricing in Slovakia. The Slovak tax authorities follow OECD transfer pricing guidelines. Nevertheless, there is still a question whether such amendment of Act on Income tax is sufficient to consider the OECD transfer pricing guidelines as legally binding. This question will have to be solved by the courts in Slovakia.

  • The Act on Income tax also includes the transfer pricing rules for the permanent establishments in Slovakia.

OECD guidance
  • The OECD transfer pricing methods are accepted and arm’s length principle is acknowledged as the principle to be used internationally.
Transfer pricing methods

Any traditional or other transfer pricing method based on the OECD guidelines may be used, and the principle of best practice should be applied. If necessary, a combination of several methods is also possible.

Methods based on price comparison

  • The CUP method – in transactions with tangible assets, intangible assets and financial transaction
  • The resale price method – mainly used for distributors
  • The cost-plus method – most often used for manufacturers selling to related parties and for the provision of services

Methods based on profit comparison

  • The profit split method – highly integrated transactions, where the parties contribute uniquely to the transaction or when they own valuable intangible assets
  • The transactional net margin method (TNMM) – The TNMM examines the net profit margin relative to an appropriate base (eg, costs, sales, and assets) that a taxpayer realizes from a controlled transaction (or transactions that it is appropriate to aggregate). It therefore operates in a similar manner to the cost plus and resale price methods, but is applied at a net margin level rather than a gross margin level.
  • Slovakia has a self-assessment regime, where it is on the taxpayer to ensure that transfer pricing regulations are adhered to.
Transfer pricing documentation
Preparation of transfer pricing documentation
  • Slovakia adopted the OECD’s transfer pricing documentation model based on the Master File and Local File (BEPS 3) approach and it is considered best practice in Slovakia. The content of the Master File and Local file is defined in the Guidelines of the Ministry of Finance.
  • Generally, the transfer pricing documentation should be prepared for each related party transaction or each group of related party transactions separately. The documentation shall be prepared in Slovak language, however the taxpayer may ask the tax authority to accept a transfer pricing documentation in English language as well.
  • The submission deadline for the transfer pricing documentation is 15 days from the date of delivery of the notice from the tax administrator or the Financial Directorate. Such request for the transfer pricing documentation for the relevant tax period must be sent no later than the first day after the expiry date for the completion of the corporate income tax return for the relevant tax period. It is not possible to prolong this deadline.
  • The Guidelines of the Ministry of Finance distinguishes the types of documentation with regard to the minimum scope as follows:
    • Complete documentation
    • Basic documentation
    • Abbreviated documentation.
Master and local file
  • There is an explicit list of expected content for Master file and Local Slovak file defined in the Guidelines of the Ministry of Finance. The structure of the transfer pricing documentation follows the structure defined by OECD, but there are some specific requirements to be met.
  • The transfer pricing documentation consisting of Master file and Local file contains the general part providing an overall picture of the Group of stakeholders. The specific section contains specific information regarding the taxpayer and the related party transactions the taxpayer is dealing with.
  • The minimum requirements for basic and abbreviated documentation do not include comparability analysis, however it is recommended to prepare such an analysis for significant related party transactions.
Some risk factors for challenge
  • Generally, loss-making positions of the limited risk companies, situations where a company’s functional profile does not correspond its profitability, provision of the various intragroup services, royalties and financing are focus areas for transfer pricing audits.
  • A penalty up to 3,000 EUR may be imposed for non-compliance with the obligations related to transfer pricing documentation. This penalty may be imposed repeatedly.
  • The Slovak tax administration may adjust the tax base and impose respective penalty during a tax audit. The transactions with foreign related parties may be subject to tax audit up to 10 years from the end of the year in which the obligation to file a tax return arose. The transactions with Slovak related parties may be subject to tax audit up to 5 years from the end of the year in which the obligation to file a tax return arose.
  • Stricter penalties will be imposed on a taxpayer who increases the tax loss or reduces the tax base through transfer pricing and tax evasion. In such cases, a penalty of 20% p.a. shall be applied to the amount of the tax difference.
Economic analysis and how to demonstrate an arm’s length result
  • Comparability analysis is barely regulated in Slovakia, the OECD guidelines should be followed. The comparability analysis must be conducted in a way that the tax authority can easily reproduce it. Both global and regional comparable companies are accepted.
  • When determining the arm’s length price, transfer pricing methods primarily depend on the determination of the comparable information (comparable price, or comparable gross, net margin). It is necessary to perform the financial statements analysis to identify the potential comparable transactions, which need to be analyzed.
  • The database filtering of the comparable companies shall be repeated every three years.
Advance Pricing Agreements (APAs), dispute avoidance and resolution
  • The taxpayer may request the tax administrator to issue an APA – a decision approving the use of the particular transfer pricing method at least 60 days prior to the tax period in which the relevant method is to be applied. The taxpayer can verify that the chosen method and price is in line with the arm’s length principles and thus avoid possible disputes.
  • The tax administrator issues a decision approving the transfer pricing method maximum up to 5 tax periods. An extension to another 5 years is possible only, when the taxpayer proves that there were no changes in the conditions under which a decision was issued.
    • The fee is stated as follows:
    • Unilateral APA: 10 000 EUR
    • Bilateral APA: 30 000 EUR
  •    The fee for highly reliable taxpayers are reduces by 50%.  
  • In case the taxpayer does not have obligation to prepare a complete, basic or abbreviated documentation according to the Guidelines of the Ministry of Finance the taxpayer fulfills its obligation to report related party transactions through submission of the corporate income tax return including filled in simplified table where only amounts of specific related party transactions are reported.
Related developments
Digital services tax
  • Digital tax has not been introduced in Slovakia. Slovakia does not intend to introduce the Digital tax by the end of 2023. Effective from 1 January 2018, foreign operators of digital platforms and websites intermediating services in transport and accommodation are obliged to register for corporate income tax purposes in Slovakia (this operators are considered to have a permanent establishment for corporate income tax purposes in Slovakia).

For further information on transfer pricing in Slovakia please contact:

Silvia Hallová.png

Silvia Hallová
D +421 2 59 300 4 – 74

Vladimír Kovár.png

Vladimír Kovár
+421 2 59 300 4 - 61