Transfer pricing compliance and documentation
The preparation of transfer pricing documentation is becoming relevant for more and more companies. Although transfer pricing documentation is not mandatory in the Czech Republic, its preparation significantly strengthens the taxpayer's evidentiary position when dealing with the tax authorities.
Guidance for the taxpayer fulfilling the transfer pricing documentation obligation in the Czech Republic is the OECD Guidelines, implemented into the Czech tax system through Guideline D-334 of the Ministry of Finance. It specifies that transfer pricing documentation for related parties in the European Union, is the basis for the calculation of the arm's length price. Although these recommendations are not legally binding, the tax authorities often refer to them, so taxpayers also reach for these recommendations.
Transfer pricing documentation in Czechia – who is covered by this obligation
Although transfer pricing documentation is not mandatory in the Czech Republic, it is worth preparing it, and the Czech tax authority recommends preparing transfer pricing documentation on the basis of the D-334 guideline. Moreover, taxpayers meeting at least one of the following conditions are obliged to report information on transactions with related parties:
- whose total assets exceed CZK 40 million
- with a net turnover in excess of CZK 80 million per annum
- whose average number of employees exceeds 50 persons
and if they also meet one of the following conditions:
- carry out transactions with related parties’ resident in another country
- have a tax loss while carrying out transactions with a foreign and/or domestic related party
- are recipients of a tax relief and simultaneously transact with a foreign and/or domestic related party
Transfer pricing documentation – learn how we can help
We provide our clients with comprehensive advisory services related to the preparation of transfer pricing documentation and knowing the transfer pricing regulations in order to meet all legislative requirements. Our experts can also assist you in selecting a suitable transfer pricing method and strategy based on your business structure and individual needs.
As part of the service offered, we will help you check the correctness of the current price calculation between related parties from a tax point of view. Moreover, we will prepare all transfer pricing documentation if required and support you in the correct determination of a transfer price that complies with the arm's length principle.
As part of the transfer pricing services offered, we will help you:
- prepare a complex transfer pricing documentation
- review and adjust the existing documentation to the transfer pricing regulations in accordance with the requirements of the Czech legislation
- choose appropriate transfer pricing strategy
- prepare comparative data analysis (benchmarking analysis)
