Page 20 - Central and Eastern European Transfer Pricing Review

20 | CEE Transfer Pricing Review

Croatia

KPMG's Views on Transfer Pricing in Croatia

The Croatian Tax Authority (CTA) is regularly performing detailed transfer pricing
audits, with the primary targets being large taxpayers. Other audit triggers, apart
from size, include a sharp fall in proft, continuing losses and companies that are
part of multinational groups.

Basic information traditional transactional method What types of transfer pricing
and transactional proft based information must be disclosed?
Tax authority name method as well as best method Not applicable.
Ministarstvo Financija, Porezna uprava rule.
(Ministry of Finance, Tax Authority). What are the consequences
What is the relationship threshold of failure to prepare or submit
Citation for transfer pricing rules for transfer pricing rules to apply disclosures?
Croatian Corporate Proft Tax (CPT) between parties? Not applicable.
Law, Article 13, and CPT Regulations, The defnition of related parties is very
Article 40. Arms length principle applies. broad but specifcally includes situations
Standard OECD methodology and where one party directly or indirectly Transfer pricing study
documentary requirements. participates in the management, control, overview
or capital of another party (no specifc
The Institute for Public Finance, Ministry thresholds), or if the same parties Is preparation of a transfer pricing
of Finance, issued in August 2009 participate directly or indirectly in the study required i.e. can the
the Manual for Inspection of Transfer management, control or capital of taxpayer be penalized for mere
Prices (the Manual). Although the another party. failure to prepare a study?
Manual is not legally binding, it Yes, for all transactions with foreign
provides useful guidance in relation to What is the statute of limitations related parties and in certain cases
transfer pricing matters and what the on assessment of transfer pricing transactions with domestic related
CTA might expect from taxpayers. adjustments? parties (more specifcally, in transactions
Effective date of transfer pricing The statute of limitation is 3 years and between two domestic related parties
if one of them has a preferential tax
rules commences after the end of the year
in which any tax liabilities should have position e.g. is entitled to a preferential
1 January 2005 new CPT Law been assessed (e.g. for the 2012 year CPT rate, is CPT exempt or has tax
entered into force introducing the statute of limitations expires at the losses available for utilization). In the case
defnitions of related parties and end of 2016). Under certain conditions an of an inspection, the CTA may impose
transfer pricing methods penalties if a transfer pricing study is not
absolute statute of limitations of 6 years
1 July 2010 amendments to the may apply. available.
CPT Law introducing provisions that Other than complying with a
transfer pricing rules also apply to Transfer pricing requirement per the previous
domestic related parties, provided question, describe the benefts, if
certain conditions are met disclosure overview any, of preparing and maintaining

March 2012 amendments to the Are disclosures related to transfer a transfer pricing study?
CPT Law to harmonize with OECD pricing required to be prepared or If the transfer pricing study is timely and
Guidelines by abolishing the provision submitted to the revenue authority correctly prepared, it shifts the burden
that the CUP method is the preferred on an annual basis (e.g. with the of proof to the CTA and can protect the
transfer pricing method tax return)? taxpayer from penalties.
No, unless specifcally requested by the
June 2012 amendments to the CTA.
CPT Regulations introducing terms

© 2013 KPMG Central and Eastern Europe Ltd., a limited liability company and a member firm of the KPMG network of independent member firms affiliated
with KPMG International Cooperative (KPMG International), a Swiss entity. All rights reserved.