Hungary eases and clerifies local rules on Transfer Pricing documentations

Hungary has introduced mandatory transfer pricing documentation for intercompany transactions already in 2005. Since than there has been a lot of facilitations and practical clerifications in local transfer pricing legislation. Nevertheless transfer pricing is still in the focus of the Hungarian Tax Authority and taxpayers may expect heavy sanctions if the transfer pricing documentation has not been prepared (6.500 EUR penalty per missing transfer pricing  documentation) or it is not appropriate.
Here are a few examples of transfer pricing legislation reliefs:
Range of the exceptions has been extended. No transfer pricing documentation is required:
  • for SME’s;
  • for intracompany intermediated services and product sales if the service or product has been purchased from an independent company, and it is invoiced to the related party with the same value;
  • intracompany transactions where the total annual market value is less than 162.000 EUR (50 million HUF).
transfer pricing documentations may be prepared in foreign language as well (english, german or french), but tax authority may ask for translation to Hungarian at the Company’ cost.
Taxpayers may choose to prepare EU Masterfile and Country specific file. Their choice shall be reported to the tax authority in the corporate income tax return.
There are special regulations on „Low added value intracompany services”, where a profit margin between 3%-10% is acceptable without the obligation to provide a benchmark analysis.
APA is available in Hungary, though it is costly and therefore not very wide-spread.
For more information, please contact us!

Katalin Simon
Vilmos Wágner