Did you know there are three types of transfer pricing documentation?

The content of transfer pricing documentation for the year 2023 is stipulated by the Guidelines of the Ministry of Finance of the Slovak Republic No. MF/020061/2022-724 on the determination of the content of documentation according to article 17(7) and 18(1) of Act No. 595/2003 Coll. on Income Tax, as amended (hereinafter “MF SR Guidelines 2023”).

MF SR Guidelines 2023 recognize three types of transfer pricing documentation:

1. full-scope documentation - consists of a Master file that describes in detail the group of related parties and a Local file (country-specific) describing the taxpayer and the controlled transaction itself. Within the Local file, the taxpayer must also demonstrate that the applied transfer prices are in line with the market conditions,
2. basic documentation – the description of the group in the Master file is not as complex and detailed as in the full-scope documentation. The Local file contains the identification of the taxpayer and description of the controlled transaction; however, it is not mandatory to demonstrate the market setting of transfer prices as part of the basic documentation,
3. simplified documentation – contains information according to the structured form of the Ministry of Finance of the Slovak Republic (annex to the MF SR 2023 Guidelines).

We recommend preparing the transfer pricing documentation together with closing of the accounting books / preparing financial statements. The taxpayer will thus be able to immediately assess whether the applied transfer prices are in line with the current market conditions or whether year-end adjustments are necessary.