USMERNENIE k zabezpečeniu jednotného postupu pri uplatňovaní ustanovení § 17 ods. 7 a § 18 ods. 4 až 10 zákona č. 595/2003 Z. z. o dani z príjmov v znení neskorších predpisov_ENG version

GUIDANCE on Application of Section 17(7) and Sections 18(4) to (10) of Act No. 595/2003 Coll. on Income Tax as later amended

Where a controlled transaction involves a related party that is tax a resident in a jurisdiction with which the Slovak

Republic has concluded a double tax treaty, the taxpayer may apply for a bilateral APA. Where the transaction

involves related parties in more than two jurisdictions, a multilateral APA may be requested.

A bilateral or multilateral APA is based on cooperation between the competent authorities of the relevant treaty jurisdictions. The aim is to achieve mutual agreement on the transfer pricing methodology to be applied to the covered controlled transaction. In the Slovak Republic, the competent authority is the Ministry of Finance of the Slovak Republic. A bilateral or multilateral APA becomes effective only after the competent authorities of all participating jurisdictions reach a mutual agreement. Following the conclusion of such agreement, the tax authority

issues a decision approving the agreed transfer pricing methodology.

One of the principal benefits of a bilateral or multilateral advance pricing arrangement (APA) is the prevention of economic double taxation and double non-taxation of income.

The issuance of a bilateral or multilateral decision is enabled by the relevant Article of an applicable double tax treaty, usually entitled “Mutual Agreement Procedure” (a provision corresponding to Article 25 of the OECD Model

Tax Convention), under which the competent authorities of the contracting states may enter into a mutual agreement procedure (MAP)

This procedure is primarily used to resolve issues and difficulties arising from the interpretation and application of double tax treaties.

Stage 1: DATA COLLECTION The process is initiated by the taxpayer who collects all information necessary for preparing the request. Stage 2: PRE-FILING MEETING A pre-filing meeting is not mandatory, but it is considered highly beneficial and is strongly recommended. The taxpayer is informed about the key requirements and conditions under which the request may be submitted and is provided with an opportunity to discuss the issues related to the preparation of the request. Stage 3: SUBMISSION OF THE REQUEST A request shall contain the following information:

- identification of the related parties involved in the controlled transaction (taxpayer’s name, address, tax identification number or other identification number if assigned), - the tax period for which the APA is requested, - a description of the controlled transaction or a group of controlled transactions, - the estimated value of the transaction(s), - the proposed transfer pricing method. The request must be supported by the transfer pricing documentation prepared in accordance with the Income Tax Act and the applicable Guidelines of the Ministry of Finance of the Slovak Republic on determining the content of the transfer pricing documentation. This so-called full–scope transfer pricing documentation contains a large amount of relevant information about the multinational enterprise group, a detailed functional and risk analysis, as well as a comparability analysis relating to the controlled transaction covered by the request. The request must be submitted at least 60 days before the beginning of the tax period in which the approved transfer pricing method is intended to be applied. Due to the complexity of the APA process, taxpayers are encouraged to apply as early as possible. The scope of the information provided and the need for any additional information depend on the circumstances of the case. In the request, the taxpayer shall provide a comprehensive description of the proposed transfer pricing method together with supporting information, as well as an assessment of potential changes in operating and economic conditions that may affect the suitability of the proposed method in the future. For certain critical assumptions, it may be appropriate to establish parameters defining an acceptable level of deviation. Given the specific nature of such parameters, they should be determined on a case-by-case basis, considering the circumstances of the case. The request shall be submitted to the Office for Selected Economic Operators (Úrad pre vybrané hospodárske subjekty) as the competent tax authority responsible for administering and providing decisions on requests submitted under Sections 17(6), 17(7), and 18(4) to (10) of the Income Tax Act. Stage 4: MONITORING OF PAYMENT Under Section 18(7) of the Income Tax Act, a taxpayer is required to pay the following fee upon submission of the request: A taxpayer applying for an APA is required to pay a filing fee of:

- EUR 10,000 for a unilateral APA; - EUR 30,000 for a bilateral or multilateral APA concluded under a double taxation treaty.

The fee is reduced by 50% if the taxpayer is classified as highly reliable under the tax reliability index at the time the request is submitted. The filing fee shall be paid to the following account: IBAN: SK45 8180 0000 0070 0043 7861, held with the State Treasury Recipient: Financial Directorate of the Slovak Republic Variable symbol: Taxpayer’s Tax Identification Number (TIN) Recipient’s Bank STATNA POKLADNICA Radlinského 32 810 05 Bratislava Slovakia BIC/SWIFT**: SPSRSKBAXXX When making a cross-border transfer that does not meet the conditions for a SEPA payment in EUR to the State Treasury’s account through an intermediary bank via the SWIFT network, the SWIFT code (BIC Code) must also be provided. The fee is a separate payment for the use of the APA mechanism and is not charged solely in consideration of a favourable outcome of the proceedings resulting in the issuance of the decision. The fee is payable without a separate request and must be paid upon submission of the APA request. If the fee was not paid upon submission of the request and in the correct amount, it must be paid within 15 days of receipt of a written request for payment issued by the tax authority. If the fee is not paid or is not paid in the correct amount, the request shall be deemed not to have been filed, and the portion of the fee already paid shall be refunded to the taxpayer. If the taxpayer fails to meet the deadline for filing the request specified in Section 18(4) of the Income Tax Act, the tax authority shall deem the request not to have been filed. The fee paid shall be refunded to the taxpayer. If the tax authority issues a notice that the taxpayer’s request has not been granted, the fee paid shall not be refunded to the taxpayer. Stage 5: ANALYSIS AND EVALUATION OF THE REQUEST The review process begins upon the submission of the APA request and requires ongoing cooperation between the taxpayer and the tax authority. During the review process, the tax authority may request additional information, explanations or supporting documents. The tax authority evaluates the request, the transfer pricing documentation, the comparability analysis, and the proposed transfer pricing method to determine whether the proposed approach complies with the arm’s length principle. Where necessary, the tax authority may request amendments to, or additional justification for, the benchmarking analysis and may propose adjustments to improve the reliability of the proposed transfer pricing approach. Stage 6: ISSUANCE OF A DECISION OR NOTICE The APA process is concluded by the issuance of a decision approving the proposed transfer pricing method, provided that the applicable conditions and critical assumptions are met. The tax authority may issue a decision approving the transfer pricing method for a period up to five tax periods. The actual period of validity of the APA decision shall be determined by the tax authority, having regard, in particular, to the controlled transaction

or a group of controlled transactions covered by the request, the relevant economic sector, any agreement reached between the competent authorities, the validity period proposed by the taxpayer, and other relevant information contained in the request and the transfer pricing documentation. The decision shall take effect from the beginning of the tax period specified in the application for the issuance of the decision, irrespective of the date on which the decision is issued, unless the tax authority or the competent authorities determine otherwise. No appeal may be lodged against the decision once issued. The validity of the APA may be extended for an additional five tax periods if the taxpayer submits a renewal request at least 60 days before the expiry of the existing APA and demonstrates that the key facts, critical assumptions and conditions underlying the original decision have not changed. The taxpayer and the tax authority shall follow the same procedure for the submission of the request and the conclusion of the APA as applies to the initial APA request. In the case of bilateral and multilateral APAs, the arrangement may be concluded for a tax period exceeding five years, including on a retrospective basis (rollback), where agreed by the competent authorities of the participating jurisdictions. If the tax authority decides not to grant the request, it shall issue a notice to the taxpayer. The filing fee is non- refundable. Stage 7: MONITORING, CHANGES OR REVOCATION OF THE DECISION During the validity period of the APA, the tax authority may monitor whether the critical assumptions on which the decision is based continue to be satisfied. The tax authority may require the taxpayer who has entered an APA to maintain records demonstrating the extent of its compliance with the terms and conditions of the APA and that critical assumptions remain relevant. Where there has been a change in the critical assumptions underlying the APA decision, the tax authority:

- shall revoke or amend the APA decision pursuant to Section 18(10)(b) of the Income Tax Act without a request from the taxpayer; or - may revoke or amend the APA decision pursuant to Section 18(10)(c) of the Income Tax Act upon the taxpayer's request, provided that the taxpayer demonstrates that there has been a change in the critical assumptions underlying the APA decision. As a general rule, the revocation or amendment of an APA decision pursuant to Section 18(10) of the Income Tax Act does not have retroactive effect. However, where an APA decision was issued on the basis of false information provided by the taxpayer, the revocation takes effect from the date on which the APA decision was originally issued, since the critical assumptions underlying the APA decision were, at the time the decision was issued, materially different from those presented to the tax authority. Issued by: Financial Directorate of the Slovak Republic Department of Tax Methodology I September 2026