Transactions within multinational companies are becoming increasingly important in business worldwide. All transactions among related parties are influenced by the Czech legal framework and, for tax purposes, prices agreed between related parties have to meet the definition of arm’s length principle. The consequences of an incorrect transfer pricing set-up can be additional tax assessment, penalties and interest on late payment. In the case of companies receiving investment incentives, having an incorrect transfer pricing set-up can even cause potential loss of these investments.
The establishment of the Specialised Financial Office in 2012, the mandatory disclosure of transactions with related parties for the year 2014 and thereafter in the corporate income tax return and the introduction of field investigations in order to collect information, all of these 3 things (acts from the tax authorities‘ side) are evidence that the Czech tax administration recognises the importance of transfer pricing. As a result, the number of tax audits that focus on related party transactions has increased recently, particularly those involving services, low-risk functions, and losses.
Our team in the Czech Republic focuses on Czech and international taxation. Our experts in the field of transfer pricing have the knowledge of local specifics and many years of extensive experience gained abroad. Due to the global PwC network, we can get support from our colleagues from foreign PwC offices. We provide, among others, the following transfer pricing services: