Transfer pricing safe harbours in the Slovak Republic
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This contribution deals with the position of the Slovak Republic in relation to safe harbours in transfer pricing from de lege lata perspective and from the perspective of existing application practice of tax authorities in Slovakia. The main aim of the contribution is to confirm or disprove the hypothesis that the existing safe harbour framework in the Slovak Republic is in line with the OECD recommendations in the Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations. Methods of analysis and synthesis and of comparative legal method were employed. The results indicate that though de lege lata the Slovak law contains certain features which might be described as safe harbours, essentially relieving certain taxpayers from the obligation to have contemporaneous transfer pricing documentation, a safe harbour stricto sensu was not identified. However, in the practice of Slovak tax authorities there seem to be routinely accepted safe harbours with respect to low value-adding intra group services. Moreover, there seems to be an excessive reliance on transactional net margin method which in practice may lead to establishment of a de facto safe harbour. The authors argue that such practice seems to be in direct contradiction to OECD recommendations, poses a significant risk of becoming a target of safe harbour shopping and should be reconsidered.
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