1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
All taxable persons entering into transactions with related parties must maintain information about related entities, the type and extent of their business transactions with such entities, and the determination of comparable market prices, as prescribed by the Slovenian Tax Procedure Act.
Transfer pricing documentation for cross-border inter-company transactions must be prepared on an on-going basis, while the documentation for domestic inter-company transactions is required to be submitted on the request of the tax authorities in a tax audit.
2. What is the content of the documentation that must be prepared?
a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?
All transactions should be documented, there is no threshold applicable.
b) What is the definition of “associated enterprises” for the purposes of this requirement?
The legislative provisions differentiate between domestic related parties and cross-border related parties.
- Cross-border controlled transactions are transactions between a resident and a foreign entity where those entities are related in such a way that:
- The taxable entity directly or indirectly holds 25% or more of the value or number of shares of the foreign entity through holdings, control over management, supervision or voting rights; or controls the foreign entity pursuant to a contract or terms of agreement different from those that are or would be achieved in the same or comparable circumstances between unrelated parties, or
- The foreign entity directly or indirectly holds 25% or more of the value or number of shares of the taxable entity through holdings, control over management, supervision or voting rights; or controls the taxable entity pursuant to a contract or terms of agreement different from those that are or would be achieved in the same or comparable circumstances between unrelated parties, or
- The same entity directly or indirectly holds 25% or more of the value or number of shares, or participates in the management or supervision of the taxable entity and the foreign entity, or of two taxable entities, or they are under the same control pursuant to a contract or terms of agreement that differ from those that are or would be agreed in the same or comparable circumstances between unrelated parties, or
- The same individuals or members of their families directly or indirectly hold 25% or more of the value or number of shares, holdings, voting rights or control over the management or supervision of the taxable entity and the foreign entity, or of two Slovene tax resident entities; or they are under their control pursuant to a contract or terms of agreement that differ from those that are or would be agreed in the same or comparable circumstances between unrelated parties.
Domestic inter-company transactions are transactions between two taxable resident persons, which are:
- Related in terms of capital, management or supervision by virtue of one resident, directly or indirectly, holding 25% or more of the value or number of shares, equity holdings, control, supervision or voting rights of the other resident; or controlling the other resident pursuant to a contract in a manner that is different from relationships between non-related parties, or
- The same legal or natural persons or their family members directly or indirectly hold 25% or more of the value or number of shares, holdings, control, supervision or voting rights; or control the residents on pursuant to a contract, in a manner that is different from relationships between non-related parties.
c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?
The local provisions on transfer pricing documentation follow the EU TPD.
d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request?
Yes, under the exchange of information provisions of tax treaties.
Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?
Yes, the taxpayer should provide the relevant information, regardless of where it is kept.
e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
Yes, pan-European benchmark studies are usually accepted.
f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?
If the documentation is not in the Slovenian language and the tax authorities request a translation, this must be provided. A minimum of 60 days is allowed to the taxpayer. It is, however, not uncommon for the tax authorities to accept the English version of the documentation without requesting a translation.
3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?
Transfer pricing documentation for cross-border inter-company transactions must be kept on an on-going basis. However, if the documentation is not available immediately, the tax authorities will set a deadline of 30 to 90 days in which it is to be provided.
Transfer pricing documentation for domestic inter-company transactions only needs to be submitted if requested by the tax authorities during a tax audit. The same period is allowed as for cross-border transactions.
4. In the event that the documentation is not provided within the applicable timescale, or is incomplete, do documentation-related penalties apply in your jurisdiction? If so, please detail the penalties and the circumstances in which they do and do not apply.
If adequate transfer pricing documentation is not in place, the penalty is EUR 1,500 – 15,000 for micro and small legal entities, EUR 3,200 – 30,000 for medium and large legal entities and up to EUR 4,000 for the responsible person in the entity.
5. Does the absence or incompleteness of documentation reverse the burden of the proof as regards the arm’s length character of the transactions?
Taxpayers must keep specific documentation proving that they apply transfer prices in line with the arm’s length principle. If proper transfer pricing documentation is in place, together with the corporate tax return, the burden of proof shifts to the tax authority.
When auditing transfer prices, the tax authorities should determine the arm’s length nature of inter-company transactions using the method previously adopted by the taxpayer, provided that the taxpayer has submitted documentation prepared in line with the recognised methods and the method used is supported by appropriate calculations.
6. In the event that the tax authorities (i) impose documentation-related penalties and (ii) make a transfer pricing reassessment, does the imposition of documentation-related penalties prevent the taxpayer from initiating any mutual agreement procedure which may be contained in an applicable tax treaty (or, for EU countries, the procedure contained in the EU Arbitration Convention) with a view to eliminating any double taxation resulting from the transfer pricing reassessment?
It is unlikely that a failure to submit transfer pricing documentation and the penalty levied in this respect would constitute a serious penalty which would prevent the initiation of the mutual agreement procedure. Note, however, that the tax authorities have not published any clarification on this issue.