Ministry of Finance issued a new Guidelines on the content of the transfer pricing documentation

New Guidelines of the Ministry of Finance of the Slovak Republic no. MF/019153/2018-724 on content of the transfer pricing documentation (hereinafter “MF SR Guidelines 2018”) were issued in December 2018 replacing the Guidelines no. MF/014283/2016-724 (hereinafter “MF SR Guidelines 2016”).

The content of the full-scope documentation as defined in the MF SR Guidelines 2018 is broadly harmonized with the content of the documentation recommended by the OECD under the BEPS 13 project.

MF SR Guidelines 2018 are effective for the tax periods beginning after December 31, 2017. The Tax Authorities may request the documentation for 2018 tax period only after April 1, 2019. However, when submitting the documentation before June 30, 2019, i.e. within the transitional period, the taxpayer may decide whether to follow the MF SR Guidelines 2016 or the MF SR Guidelines 2018. After June 30, 2019, the taxpayer must submit the documentation in line with the MF SR Guidelines 2018.

MF SR Guidelines 2018 similarly as the MF SR Guidelines 2016 recognize three types of the documentations in terms of extent –simplified, basic and full-scope. Compared to the MF SR Guidelines 2016, significant changes were made in respect of criteria for determining type of documentation taxpayer has to keep, as well as the content of each type of documentation. For example, the simplified documentation is now a prescribed form and is included as an appendix to the MF SR Guidelines 2018. The Master File of the full-scope documentation went through the most significant changes and is now much more complex. Based on the type of information requested, preparation of Master File by Slovak subsidiaries of multinationals will be very challenging without intensive support from the headquarters. Due to above reasons we recommend to designate sufficient time for its preparation.

The table below shows couple examples (among many others) of change of the taxpayer’s obligation to keep the documentation.     

Taking into account significant changes implemented through the MF SR Guidelines 2018 and the fact that every single taxpayer carrying out transactions with its related parties is affected, we recommend a careful examination of the MF SR Guidelines 2018’s impacts in each individual case and preparation of the documentation following new rules as soon as possible. Please note that the deadline for the submission of the documentation has not changed, i.e. 15 days after the Tax Authorities’ request, extension is not possible.     

In case of any questions, do not hesitate to contact our transfer pricing experts Martin Zima and Petra Bohovičová.