a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?
The taxpayer is obliged to document all transactions between associated enterprises. There are no limitations.
b) What is the definition of “associated enterprises” for the purposes of this requirement?
In Czech law the definition of “associated enterprises” is as follows:
- Parties related through capital:
- One person or party directly or indirectly participates in the capital or voting rights of the other and has a holding of at least 25%
- Parties related otherwise than through capital:
- One person or party participates in the management or control of another person or party;
- There is a controlling person or party and a controlled person or party, or more than one person or party with the same controlling person or party;
- Close parties;
- Persons or parties which have established a legal relationship predominantly for the purpose of reducing their tax base or increasing their tax loss.
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?
In Czech law there are no specific requirements for transfer pricing documentation. If the taxpayer decides to prepare the documentation according to the EUTPD, Czech tax authorities must accept the regulations of EUTPD. If not, there are no special requirements for transfer pricing documentation and the taxpayer can use any documents. On the other hand, the tax authorities are entitled to judge all documents at their discretion.
d) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?
Under Czech law, the tax authority has a general right to ask for information from any person who may have relevant knowledge, being knowledge related to the case under consideration within the tax procedure. If the taxpayer uses the EUTPD, he must explicitly agree to provide information to the tax authorities.
e) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?
Such studies are not compulsory.
f) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?
The language of the documentation is not directly prescribed. Czech tax authorities accept Czech or Slovak language documents; in the case of other foreign languages they can ask for a translation of some parts or even the whole of the documentation.