Is charge transfer transitions really too difficult for standard density functionals or are they just a problem for time-dependent density functional theory based on a linear response approach

It is well known that standard time-dependent density functional theory (TD-DFT) affords both a quantitative and qualitative incorrect picture of charge transfer transitions between two spatially separated regions. It is shown here that the well-known failure can be traced back to the use of linear response theory. Further, it is demonstrated that the inclusion of higher order response terms readily affords a qualitatively correct picture even for simple functionals based on the local density approximation. By using the higher order response terms, we finally derive a correction that can be added as a perturbation to charge transfer excitation energies calculated by standard TD-DFT.