Did you know about the term “controlled transaction”?

For the transfer pricing purposes, the term “related person”¹ means:

• close person,
• economically, personally or otherwise related person or other entity,
• person or other entity who is a part of consolidated group for consolidation purposes.

According to the Income Tax Act, the term “controlled transaction”² refers to a legal relationship or other similar relationship between two or more related persons, where at least one of them is:

• taxpayer earning income as described in article 6 of the Income Tax Act (enterprise income, self-employment income, lease income, income from the use of work and artistic performance) or
• legal entity that receives taxable income from activities or from dealing in property.

Since 2023, the concept of significant controlled transaction was added to the Income Tax Act, according to which transactions with a value exceeding EUR 10,000 (credits or loans with principal exceeding EUR 50,000) are considered significant.

In case of the significant controlled transactions, the taxpayer is obliged to monitor the market setting of the transaction and keep transfer pricing documentation. In the case of insignificant controlled transactions, the documentation obligation is fulfilled by submitting a properly completed tax return.

The new Guidelines of the Slovak Ministry of Finance on determining the content of transfer pricing documentation, as well as the amendment to the Income Tax Act, have been discussed in more detail in our previous articles.

¹ Article 2(n) of the Slovak Act No. 595/2003 Coll. on Income Tax, as amended.

² Article 2(ab) of the Slovak Act No. 595/2003 Coll. on Income Tax, as amended.