With the profit tax declaration (Form PD) for 2022, taxpayers also submit a Report on business events with associated parties – Form PD-IPO to the Tax Administration. The above form should be submitted by the Rulebook on Profit Tax.
Who are the related parties?
Related parties are parties where one person participates directly or indirectly in the management, supervision or capital of another person or when the same persons participate directly or indirectly in the company management, control and capital (according to Article 13, paragraph 2 of the Profit Tax Act). Regarding tax implications, the term “connection of persons” can refer to various relationships, including those between physical persons, physical persons and legal entities, and between legal entities.
Who must submit Form PD-IPO?
The mentioned Form PD-IPO should be submitted by taxpayers who, during the tax period, recorded business events with related parties concerning received and given loans and the sale and purchase of goods and services. This group includes all corporate taxpayers, i.e. legal and natural persons who are self-employed and are corporate income taxpayers.
Obligation to draw up Form PD-IPO
The obligation to draw up the Form PD-IPO derives from Art. 46, paragraph 2 of the Ordinance on profit tax (Order Nov., No. 95/05. – 156/22.). Data related to the tax period are entered in the Form along with the initial balances on the first day of the tax period.
The PD-IPO Form is a tax report, and it contains obligations and claims to related parties from the tax point of view, i.e. from the point of view of the Profit Tax Act (Order of Nov., No. 177/04. – 144/22) and the General Tax Act (Nor. Nov., No. 115/16. – 144/22.).
The number of liabilities to related parties/the number of receivables from related parties on Form PD-IPO as of December 31, 2022, may be equal to or greater than the number of liabilities/receivables reported as of December 31, 2022, in particular balance sheet positions.
What data do taxpayers enter in Form PD-IPO?
The PD-IPO Form must contain data on all received loans and credits from related parties, regardless of whether the interest is calculated or is a tax-recognized or non-recognized expense. Therefore, one should not look for a direct connection between the data on the interest shown in Form PD and PD-IPO (except for excessive debt interest and too low credit interest between related persons).
In the mentioned Form, deliveries of goods and services to related parties and procurement of goods and services from related parties are entered, regardless of whether they have been charged or not and whether there is a claim on December 31, 2022.
The report on business events with related parties contains four groups of data:
- I.1. Liabilities to related parties based on received loans and credits – related parties appear in the role of lenders
- I.2. Receivables from related persons based on loans and credits granted – related persons appear in the role of borrowers
- II. 1. Obligations to related parties based on the procurement of goods and services – associated parties appear in the role of suppliers
- II.2. Receivables from related parties based on deliveries of goods and services – associated parties act as customers.
Delivery of Form PD-IPO
Taxpayers submit the PD-IPO Form to the Tax Administration through the e-Tax system.
