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Slovak Republic – Transfer Pricing (2025)

The domestic transfer pricing framework in the Slovak Republic incorporates the Arm’s Length Principle pursuant to the Income Tax Act, Article 17, para 5 and Article 18, para 1. The Income Tax Act explicitly refers to the methodology of the OECD Transfer Pricing Guidelines as a source of interpretation (Income Tax Act, Article 18, para 1). Accordingly, pricing between related parties must be aligned with what would have been agreed by independent parties in comparable circumstances, and the domestic rules are interpreted in light of the OECD Guidelines.

The Income Tax Act provides a detailed definition of related parties for transfer pricing purposes in Article 2. The term ‘associated person’ is defined to include a close person, a person or entity with economic, personal or other ties, and a person or entity that is part of a consolidated whole for consolidation purposes. ‘Economic ties or personal ties’ are defined to include participation in the assets, control or management of another person or entity or mutual relations between persons or entities under the control or management of the same person or close person, or where there is direct or indirect ownership interest. For the purpose of participation calculation the law specifies thresholds and formulas: a direct, indirect or indirect derived interest amounting to at least 25 % of registered capital, 25 % of voting rights or 25 % of profit indicates participation. Indirect interest is calculated as the product of percentages and indirect derived interest sums indirect interests; specific rules apply when indirect derived interest exceeds 50%, and for the aggregation of interests held by close persons. ‘Management’ is described as the relationship between members of statutory bodies or supervisory bodies and the legal person, and ‘other ties’ encompass legal or similar relationships created in particular to reduce tax base or increase tax loss. Article 2 r) additionally treats relationships between taxpayers with unlimited tax liability and their permanent establishments abroad, and between taxpayers with limited tax liability and their permanent establishments in the Slovak Republic, and requires assessment of mutual relationships between permanent establishments and related taxpayers in the same manner.

The English legislative text provided in the country profile is an unofficial translation and, in case of discrepancy, the Slovak original shall prevail.

Arm’s Length Principle and the role of the OECD Guidelines

The Slovak Republic applies the arm’s length principle as codified in the Income Tax Act (Article 17 para 5; Article 18 para 1). The Income Tax Act states that the methodology set out in the OECD Transfer Pricing Guidelines shall be used as a source of interpretation. Therefore, in practice, the OECD Guidelines play a central interpretative role in transfer pricing matters, unless a specific domestic rule provides otherwise.

As noted above, related parties are defined in Income Tax Act, Article 2. The law contains quantitative thresholds for ownership or control (25% of registered capital, voting rights or profit) and detailed rules for calculating direct, indirect and indirect derived interests, including aggregation of interests of close persons. Management relationships between statutory or supervisory body members and the entity qualify as ties, and the law explicitly covers permanent establishments: relationships between a taxpayer and its permanent establishments abroad or in the Slovak Republic are to be assessed similarly under Article 2 r).

Methods and selection criteria (hierarchy if any)

Income Tax Act, Article 18 provides for the use of the five methods recognized by the OECD Transfer Pricing Guidelines — the comparable uncontrolled price method (CUP or arm’s length price), the resale price method, the cost-plus method, the transactional net margin method (TNMM) and the profit split method — or a combination of those, or another method that is compliant with the arm’s length principle. Article 18 paragraphs 2 and 3 give a brief description of how these methods should be used and distinguish methods based on price comparison (arm’s length price, resale, cost-plus) and those based on profit comparison (profit split and TNMM). The selection criterion set out in domestic law is the most appropriate method in line with the OECD Transfer Pricing Guidelines; there is no statutory hierarchical order of methods.

Comparability and ranges (preference for comparables, adjustments, ranges)

Income Tax Act, Article 18 para 1 states that the arm’s length principle is based on comparison of terms agreed in related-party transactions with those agreed between unrelated parties in similar transactions under comparable circumstances. The review of comparability must confront, inter alia, the businesses conducted by the parties, including production, assembly, R&D, purchase and sale, the scope of business risks, characteristics of the compared property or service, contractual terms, the economic market environment and business strategy. Terms are considered comparable if there is no material difference or if such difference can be eliminated.

Administratively, there is a preference for domestic comparables as long as other comparability factors are satisfied, but no detailed statutory methodology for preferring domestic over foreign comparables is provided. The use of secret comparables is not permitted. The law does not prescribe specific statistical measures (e.g., interquartile range) for determining arm’s length remuneration; however, it contains a specific rule: if, in a tax audit, the taxpayer’s price/result is found to be outside the arm’s length range (the range itself is not statistically specified), the taxpayer’s tax base shall be adjusted to the median value unless the taxpayer demonstrates that another value is appropriate (Income Tax Act, Article 18 para 1). Comparability adjustments per se are not mandated in the statute; the law refers to the OECD Transfer Pricing Guidelines for the treatment of comparability adjustments and allows methods or combinations of methods that comply with the arm’s length principle.

Transfer pricing documentation and reporting (Master, Local, CbC; thresholds, language, timing, forms)

The domestic framework requires taxpayers to prepare transfer pricing documentation. The obligations include a Master file consistent with Annex I to Chapter V of the OECD TPG, a Local file consistent with Annex II to Chapter V, and a Country-by-Country report consistent with Annex III to Chapter V. Specific transfer pricing returns (separate or annexed to the tax return) are also required. The content and preparation of documentation are further specified in Guidance of the Ministry of Finance of the Slovak Republic MF/020061/2022-724 in relation to Income Tax Act Article 17 section 7 and Income Tax Act Article 18 section 1.

Procedural rules require the taxpayer to submit transfer pricing documentation within 15 days from delivery of a tax administration request. Such a request for documentation relating to the relevant tax period may be sent no earlier than the first day after expiry of the period for tax return filing for that tax period. Documentation may be submitted in a language other than Slovak; the tax administration may require a Slovak translation, which must be provided within 15 days. Consistent with Chapter V of the OECD TPG, Country-by-Country Reporting (CbCR) must be filed by Ultimate Parent Entities resident in the Slovak Republic where consolidated group revenue exceeds EUR 750 million.

Documentation requirements are tiered: the largest taxpayers and largest transactions must maintain full transfer pricing documentation consistent with Annexes I and II to Chapter V; middle-sized taxpayers and transactions must retain basic documentation of lesser scope; the smallest taxpayers and low-volume transactions are subject to a simplified documentation form. Certain low-volume / low-risk transactions are exempt from documentation altogether. These rules and exemptions are set out in the Guidance MF/020061/2022-724, Income Tax Act Article 18 para 11 and Act No. 442/2012 Coll. on International Assistance and Cooperation in the Field of Taxation, Articles 22a to 22g.

There are no transfer-pricing-specific penalties in domestic law. General administrative penalties for non-financial obligations under the Tax Administration Act, Article 154 para 1 letter j) range from EUR 30 to EUR 3,000.

Safe harbours / exemptions / materiality

The Slovak framework provides simplification measures: transactions with an effective value below EUR 10,000 are outside the scope of transfer pricing rules (Income Tax Act, Article 17, para 1, letter a). For loans, the relevant threshold is EUR 50,000 and applies to the principal amount. Thus, small transactions and low-value loans are effectively exempt from application of transfer pricing rules. Additionally, simplified documentation regimes and specific exemptions for low-volume or low-risk transactions are provided in administrative guidance.

APAs and MAP; procedures and timing

Advance Pricing Agreements (APAs) are explicitly recognized under the Income Tax Act. The statute contemplates unilateral, bilateral and multilateral APAs, and permits roll-back where bilateral or multilateral APAs are agreed. The Income Tax Act, Article 18, para 4-10 addresses APAs. Mutual Agreement Procedures are available and regulated under the Act on Dispute Resolution in respect of Taxation; further practical detail and experience are summarized in the Slovak Republic OECD MAP profile. While APAs and MAPs are available, the country profile does not specify precise statutory timelines for how long APA or MAP processing will take; for procedural timing details one must consult the relevant administrative guidance and the MAP profile.

Sanctions and other considerations (secondary adjustments, recharacterisation, year-end adjustments, PEs)

There are no explicit statutory provisions for secondary adjustments in the Income Tax Act; the domestic framework states that secondary adjustments are not provided for. Year-end adjustments are allowed (i.e., permitted but not mandatory). Regarding downward corresponding adjustments, if a primary adjustment is made by a tax administration of another jurisdiction with which the Slovak Republic has a Double Taxation Agreement in place, the Slovak tax administration may allow the corresponding adjustment without the necessity of opening a Mutual Agreement Procedure (Income Tax Act, Article 17 para 6). For domestic transactions between local related parties a unilateral downward adjustment is possible subject to a notification obligation.

On profit attribution to permanent establishments, the Slovak Republic uses Article 7 as it read before 2010 in all its treaties and has a reservation to the 2010 version of Article 7. The Slovak Republic does not apply the Authorized OECD Approach (AOA). Domestically, Income Tax Act, Article 17 para 7 states that the separate entity approach and the arm’s length principle apply to permanent establishments. The method to determine the tax base of a PE should generally follow the methods recognized in the OECD Transfer Pricing Guidelines and APAs are available for determining the tax base of a PE. The country profile also clarifies that, as regards notional transactions between an enterprise and its PE, Slovakia adheres to an interpretation where no profit mark-up, or interest charges or royalties may be recognized in intra-entity dealings; interest or royalties paid to another entity (within or outside the group) or its respective portion may be allocated to the PE. The OECD PE Report 2010 is applied only to the extent consistent with this approach.

Other relevant information and conclusion

The Slovak transfer pricing framework is anchored in domestic law (Income Tax Act) while formally adopting the OECD Transfer Pricing Guidelines as an interpretative source. It recognizes the five OECD methods, applies the most appropriate method principle, and implements a tiered documentation regime including Master file, Local file and CbCR with specified thresholds (notably EUR 750 million for CbCR). Simplification measures exclude small-value transactions under EUR 10,000 and loans under EUR 50,000 principal from TP rules. Interest deduction limitations apply via Income Tax Act provisions and EU ATAD implementation (deduction of related-party interest limited to 25% of EBITDA under Income Tax Act, Article 21a and Income Tax Act, Article 17k). APAs (unilateral, bilateral, multilateral) and MAP are available with roll-back permitted for bilateral/multilateral APAs. The Slovak Republic follows the pre-2010 Article 7 in tax treaties and does not apply the AOA for PE attribution.

Where the domestic framework lacks specific guidance (for example detailed domestic rules on financial transactions in transfer pricing or adoption of the low value-adding intra-group services simplified approach), the OECD Transfer Pricing Guidelines are to be followed.

References

For more information, consult the OECD country profiles page: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html

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