Transfer pricing

Transfer pricing

Today many companies operate as connected parties and as such have transactions with each other. Since such transactions can allow the transfer of profit from one company to another, and consequently the transfer of tax liabilities, Tax Authorities around the world have implemented specific OECD guidelines since the scope and content of transfer pricing documentation is not detailed specified in  Law and Corporate Income Tax Regulations.

If the Croatian company has business relations with related parties abroad, it is obliged to submit to the Croatian Tax Authorities documentation that shows that the transactions performed were in accordance with market prices.

If the same cannot be proven, the Tax Authorities have the right to question such transactions. If your company has undertaken transactions with related parties in the year 2019, it has the following reporting obligations:

  1. Prepare a Master file
  2. Prepare a local file
  3. Submit a Notification on Country-by-Country report.

Notification on the Country-by-Country report is related to companies that are part of multinational groups.

Transfer pricing documentation should be submitted to the Tax Authorities by all taxpayers who are subject to this obligation. Since filing deadline is not precisely defined, the deadline for submission of Masterfile is recommended to be the date of submission of a tax return for the parent company, and the deadline for submission of Local file is recommended to be the date of submission of a tax return for the resident company.

Transfer pricing provisions also apply to resident companies if one of the related parties has a preferential tax status or the right to transfer a tax loss.

Therefore, in these cases, the resident company is required to prepare transfer pricing documentation also.

If you need any assistance with transfer pricing, feel free to contact our team at

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