Hungary: Guidance on transfer pricing reporting
A draft transfer pricing decree providing details on a new transfer pricing reporting obligation issued
Draft decree providing details on a new transfer pricing reporting obligation issued
The Ministry of Finance issued on 9 December 2022 a draft transfer pricing decree providing details on a new transfer pricing reporting obligation, as well as describing the information that must be provided in the corporate income tax return.
The draft decree provides:
- The reporting must be prepared on a transaction-by-transaction or a consolidated transaction basis.
- The information must include, among other things, the characterisation of the transaction, the most relevant TEÁOR code, the transactional value, certain administrative data pertaining to the involved parties, the transfer pricing methodology and indicator selected, and the arm's length price or price range.
- The transactions covered by the reporting obligation may be broader than those transactions with documentation obligation.
- The transfer pricing reporting obligation in the corporate income tax return applies at the earliest to returns filed after 31 December 2022.
In addition to the above, significant changes to the transfer pricing documentation rules are expected as follows:
- The HUF 50 million transfer pricing documentation threshold is expected to be increased to HUF 100 million.
- The penalty for not preparing transfer pricing documentation or for incomplete transfer pricing documentation will be increased to HUF 5 million per transaction, and an additional HUF 5 million may be imposed for a missing or inadequate Masterfile.
- In the case of intra-group services, more detailed information should be presented regarding the pricing of such transactions than before (e.g., on cost allocation methodology or keys).
KPMG observation
The transfer pricing reporting obligation is based on the local transfer pricing documentation covering the financial year; therefore, timely preparation of the documentation is an essential part of the reporting obligation.
This change means also that it is particularly important that the necessary data for the preparation of the transfer pricing documentation be made available in sufficient time in order to fulfill the transfer pricing reporting obligation in the corporate income tax return.
Read a December 2022 report [PDF 514 KB] prepared by the KPMG member firm in Hungary
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