The amendment act to the Income Tax Act taking effect in 2017 has, in addition to other important changes, brought changes in transfer pricing. Multiple changes have been made in transfer pricing since 2017, but the most significant cover the changes in the definition of related persons.
Definiton of related persons in transfer pricing changed effective as of 2017
A substantial change affects, since 2017, the economic or personal interrelation which is defined in a quite extensive Section 2 sub-section o) of the Income Tax Act, and therefore they allow for the combination thereof. Moreover, compared to its previous language, the economic (through ownership) and personal interrelation may also arise through the relation of close persons.
Other interrelation establishing a relationship of related person between entities originally applied to a business relation only, but since 2017 it may arise basically based on any legal or similar relationship. The typical features of other interrelation may include obviously inappropriate conditions of a transaction without economic grounds leading to a purposeful reduction of the tax base or increase in the tax loss, this being the primary goal of such interrelations.
TPA Transfer Pricing Group Desk
We are happy to answer any further questions you may have and to support you in preparing the transfer pricing documentation! If you have questions about the OECD BEPS Action plan or cross border transactions contact our transfer pricing experts for consilidation. If you have questions about annual financial statements or transfer pricing documentation in Slovakia contact our local tax experts in Bratislava.
Transfer Pricing in CEE/SEE
Find out more about Transfer Pricing documentation and rules in CEE/SEE:
- Slovakia: Country by Country Reporting
- Poland: Country by Country Reporting
- Bulgaria: Country by Country Reporting
- Serbia: Transfer Pricing Documentation
- Austria: Mandatory Transfer Pricing Documentation
- Romania: Transfer Pricing Records