Latest transfer pricing developments in Slovenia

Although transfer pricing has been a feature of Slovenian tax legislation since 2005, some rather important developments have taken place in the last few years. The area is regulated according to the

OECD rules with some, at first glance minor but in real life rather great, discrepancies.

After 2007, a taxpayer should be able to prove its correct and solid position in transfer pricing by using one of five ‘standard’ methods.

However, before 2007, any other method that would assure a logical and correct supervision of used prices was legitimate and a taxpayer was able to use that method to prove its case.

After 2007, however, the law was amended so that no method other than one of the standard five could be used. At first glance, this seems like a minor change but in day-to-day business, it may produce important consequences leading to uncertain position for taxpayers.
This becomes evident especially in transactions carried out under innovative regimes. In the area of intangible assets such as intellectual property, the standard methods may soon be exhausted without producing a satisfactory and defensible position. Appropriate methods developed and used elsewhere (for instance in the United States) cannot be used since they do not count as legitimate, no matter that they can assure good results and solid supervision.

This keeps taxpayers in uncertainty as to whether defined and used prices match the benchmarking criteria and, as such, count as fair market prices for tax purposes.

As things stand at present (2009), it is still not possible for taxpayers to enter into an APA (advance pricing agreement) with the Slovenian tax authorities, although there is strong and constant pressure on the government to put the necessary infrastructure in place for such agreements in the future. Based on the latest developments, the tax authorities are believed to be planning for this eventuality, and APAs could ‘go live’ in the next few years. This could be of great importance for taxpayers.

Some new developments have also taken place in the area of official tax inspections.

The Slovenian tax authorities have recently developed a questionnaire that is used in transfer pricing inspections (as a checklist and guide). Areas covered by this questionnaire include transfer pricing but in some cases only tangentially. Whether this questionnaire will become a standard element of a transfer pricing inspection is not yet known.

**The information contained on this website and from any communication related to this website is for informational purposes only and does not constitute any legal, financial or other advice. For specific tax advice you should contact a qualified professional.