Slovakia

  1. In your jurisdiction, what are the legal bases for eliminating double taxation further to a transfer pricing reassessment (European Arbitration Convention, mutual agreement procedures provided for by tax treaties)? In addition to the procedures set forth by such tax treaties, is there any other (formal or informal) domestic procedure in your jurisdiction?
  2. In addition – as the case may be – to the European Arbitration Convention, did your jurisdiction sign tax treaties with other States including an arbitration procedure? If yes, can you give the list of such States?
  3. In your experience, in your jurisdiction, how long does it take generally to eliminate the double taxation under the European Arbitration Convention and/or mutual agreement procedures set forth by tax treaties (and/or the domestic procedure if it exists)?
  4. In your jurisdiction, what are the starting point and time limit to initiate a procedure to eliminate double taxation resulting from a transfer pricing reassessment?
  5. If a reassessment is issued by your tax authorities, which State must receive the application for the international procedure to eliminate double taxation 1 The terms "international procedure to eliminate double taxation" mean the European Arbitration Convention or a mutual agreement procedure set forth by a tax treaty.  (your State? the other State concerned? both States?)
  6. What are the formal conditions to initiate an international procedure to eliminate double taxation? Is there a list of documents to provide? To which department of the tax authorities (name, address) must the request be sent?
  7. In which cases would the competent authority of your jurisdiction refuse to engage/participate to the international procedure to eliminate double taxation?
  8. Is tax collection suspended during the procedure?
  9. Assuming the procedure results in an agreement on a way to cancel double taxation, how is generally such agreement implemented in your jurisdiction?
  10. In your jurisdiction, is it possible to engage concomitantly an international procedure to eliminate double taxation and litigation in front of courts? If yes, is it necessary at some stage to abandon the litigation in order to conclude/finalize the international procedure?

In general, the Slovak tax authorities accept and apply the relevant Article of Double Tax Treaty as well as the European Arbitration Convention in case and for the purpose of eliminating double taxation. If foreign related party suffered a reassessment, a particular article of the Slovak Income Tax Act could be implemented. The local taxpayer can apply for the double taxation elimination. Application must be submitted together with respective Transfer Pricing Documentation in which relevant transactions are identified and described in a scope and a corresponding manner according to Guideline of Ministry of Finance on documentation content.

A Slovakian company can apply for a domestic procedure leading to a unilateral elimination of a double taxation if a reassessment was made by a foreign tax authority to the tax basis of a foreign related party.

2. In addition – as the case may be – to the European Arbitration Convention, did your jurisdiction sign tax treaties with other States including an arbitration procedure? If yes, can you give the list of such States?

There is no Double Tax Treaty concluded by Slovakia which includes an arbitration clause producing the same effect as the European Arbitration Convention.

3. In your experience, in your jurisdiction, how long does it take generally to eliminate the double taxation under the European Arbitration Convention and/or mutual agreement procedures set forth by tax treaties (and/or the domestic procedure if it exists)?

The mutual agreement procedure or procedure under European Arbitration Convention takes at least but most often more than 12 months.

4. In your jurisdiction, what are the starting point and time limit to initiate a procedure to eliminate double taxation resulting from a transfer pricing reassessment?

Slovak tax authorities would only accept to open a MAP further to a tax reassessment in another jurisdiction. In our opinion the starting point for initiating the MAP in Slovakia could be the tax reassessment performed by the other tax authorities, if such tax reassessment does not prevent from using a MAP to eliminate double taxation.

It is recommendable to discuss the case with the local tax authority prior to application.

5. If a reassessment is issued by your tax authorities, which State must receive the application for the international procedure to eliminate double taxation 1 The terms "international procedure to eliminate double taxation" mean the European Arbitration Convention or a mutual agreement procedure set forth by a tax treaty.  (your State? the other State concerned? both States?)

As mentioned above, the Slovak tax authorities never accept to open a MAP following domestic tax reassessment. In most cases, such reassessment is subject to domestic remedies.

In our opinion it is possible to both go to court in Slovakia and to initiate a mutual agreement procedure in the other state concerned.

6. What are the formal conditions to initiate an international procedure to eliminate double taxation? Is there a list of documents to provide? To which department of the tax authorities (name, address) must the request be sent?

Application for international double taxation elimination procedure is submitted to the particular tax authority from which the taxpayer is attached for corporate income tax according to the Slovak Tax Code.

In the framework of the application, an actual Transfer Pricing Documentation must be attached. There is no special form for such application.

7. In which cases would the competent authority of your jurisdiction refuse to engage/participate to the international procedure to eliminate double taxation?

We are not aware of any case in Slovakia for which the European Arbitration Convention was used or even which implementation was requested by a taxpayer for elimination of double taxation.

However, the Slovak tax authorities are generally allowed to deny and reject any application further to a transfer pricing reassessment, mostly due to a lack of evidences provided and insufficient transfer pricing documentation. If such rejection happens, no other remedy or correction is possible.

8. Is tax collection suspended during the procedure?

No opportunity to postpone tax collection is offered to the taxpayer during processing of international procedure.

9. Assuming the procedure results in an agreement on a way to cancel double taxation, how is generally such agreement implemented in your jurisdiction?

Correlative adjustments should be performed step by step on respective fiscal period (if the use of relevant transfer pricing method was approved by Slovak tax authorities and tax reassessment in the other State is proved).

No interest can be paid to the taxpayer while tax is refunded.

No deemed distribution can be characterized as a secondary adjustment.

10. In your jurisdiction, is it possible to engage concomitantly an international procedure to eliminate double taxation and litigation in front of courts? If yes, is it necessary at some stage to abandon the litigation in order to conclude/finalize the international procedure?

Because Slovak law does not provide any guideline on this, we assume it is possible to apply both for an international procedure to eliminate double taxation and litigation in front of courts.

Authors

Petra Corba Stark
Petra Čorba Stark
Head of Corporate/M&A