Practical Application of Art. 9 OECD Model Convention: the Czech Republic

Abstract

All transfer prices determined between the associated enterprises must comply with the arm’s length principle. The arm’s length principle for associated enterprises is mentioned in Art. 9(1) of the OECD Model Convention, which was also adopted by the OECD Member states into their national law. However, not all OECD Member states adopted the next part of Art. 9, namely Art. 9(2), with the same way, some of them, like the Czech Republic, entered a reservation on Art. 9 (2) OECD Model Convention. In this paper the practical application of Art. 9 is analyzed from the point of view of the Czech Ministry of Finance, where the corresponding adjustment and time-limit issue are highlighted. On the basis of the results of analysis, where the history, context and purpose of Art. 9 OECD Model Convention have to be taken into account, are made some recommendations.

Keywords

• transfer pricing
• arm's length principle
• corresponding adjustment
• article 9
• OECD Model Tax Convention