Since 2014, taxable entities that meet specific criteria have been obliged to fill in an appendix to the corporate income tax return related to intercompany transactions. Also due to this measure, transfer prices have attracted the attention of the tax administration more significantly.
The taxable entity is supposed to fill it in, if it meets at least one of the following criteria: the entity owns assets of at least CZK 40 million; the entity generates turnover exceeding CZK 80 million; the entity’s average recalculated headcount equals 50 and, simultaneously, the entity performed a transaction with a related entity abroad, incurred a loss or was granted a promise for investment incentives and, simultaneously, performed a transaction with a related party. In short, these are the preconditions indicating that the taxable entity is obliged to inform the tax administration on its intercompany transactions in detail.
In 2018, the tax administration has issued a new form of the attachment that is to be filled in already for the 2017 reporting period. The attachment has been extended to include additional lines, specifically in Table B where, for the first time, the costs and income from rents will be filled in (Line 4), and in Table C, where the taxable entity will newly indicate whether it provided or received any financial or bank guarantees.
The obligation to file the transfer pricing attachment will newly apply to financial institutions It is still valid that the attachment is not to be filled in by the permanent establishment of tax non-residents.
All details necessary for the preparation of the attachment to the tax return are described in the instructions provided for the filling of Item 12, Part I of the corporate income tax return.
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