The 2026 audit plan of the Hungarian National Tax and Customs Administration (NAV) sends a clear message: transfer pricing remains a priority audit area. Based on the number of transfer pricing reviews and audits carried out in recent years, the question is no longer whether there will be an audit in the near future, but rather on what data and with what level of scrutiny NAV will select the companies concerned — in other words, how often businesses are likely to encounter tax inspectors.
NAV’s audit practice is increasingly based on data-driven risk analysis: transfer pricing data reporting, online invoice data, financial statements, and international information exchange systems are used together to identify high-risk transactions.
In this environment, the focus is increasingly on consistency across datasets, substantiation of economic substance, and the substantive application of the OECD methodology.
We discussed NAV’s 2026 audit plan in detail in an earlier blog post.
A shift in focus: transfer pricing documentation alone is no longer sufficient
NAV’s audit criteria now go beyond the question of whether transfer pricing documentation has been prepared. During audits, the following areas are increasingly coming into focus:
Consistency between transfer pricing data reporting and documentation
NAV regularly compares the transfer pricing data reporting submitted as part of the corporate income tax return (ATP forms) with the contents of the Local File.
In transfer pricing audits, the following elements are typically scrutinised:
- consistency of transaction values
- consistency of the selected transfer pricing method
- determination of the tested party
- application of profitability indicators
During a transfer pricing audit, the primary source of information is the transfer pricing documentation, while selection for audit is primarily based on the ATP forms. If the tax inspectors identify inconsistencies already at this stage, the likelihood of a much more detailed audit increases significantly.
The actual substance of the functional analysis
The tax authority is reviewing in greater and greater detail whether the functional analysis genuinely presents the activities performed by each party, the assets used, and the risks assumed (FAR analysis). Template-based, generic descriptions will only raise further questions.
Profitability and segmentation
NAV places special emphasis on whether:
- the profitability of related-party transactions falls within the arm’s length range; and
- the company has properly segmented its individual activities.
A particularly sensitive issue is where the results of several functions (e.g. manufacturing, distribution, services) are presented in a single company-level indicator.
In practice, the authority is increasingly assessing whether the documentation reflects economic reality — mere formal compliance is no longer sufficient.
What has changed in NAV’s audit approach?
As in previous years, NAV continues to select companies for audit based on risk analysis. Traditional filters — such as persistent losses or low profitability — will remain decisive this year as well.
At the same time, the depth of the audits will clearly increase.
In practice, the following review aspects are appearing with increasing frequency:
- review of segmented profit and loss statements
- analysis of DEMPE functions in the case of intangibles
- comparison of actual operations with the documentation
- analysis of group-level interrelationships
Because of the latter, the importance of the Master File is also increasing, especially where the link between group-level value creation and income allocation is not clear.
NAV’s audit practice is therefore moving ever closer to the methodological depth of the OECD Transfer Pricing Guidelines: a template-based functional analysis is no longer enough; taxpayers must demonstrate where value is created and who actually bears the risks.
The greatest challenge is posed by tax year 2025
The new transfer pricing decree (NGM Decree No. 45/2025) introduced transitional rules for tax year 2025.
In practice, however, this is not merely an administrative simplification, but rather has created a specific “hybrid” regulatory situation.
Local File – optional application of the new structure
For tax year 2025, the new documentation structure may already be applied.
One of its key elements is that:
- below HUF 150 million, an exemption from preparing a Local File may apply;
- however, above HUF 100 million, transfer pricing data reporting remains mandatory.
- This means that for certain transactions, a Local File may not be formally required, yet because of the data reporting obligation there may still be a need for:
- a benchmark analysis
- segmentation
- profitability calculations
- internal supporting calculations
Master File – no choice here
In the case of the Master File, the previous rules still apply in 2025.
This means that:
- the HUF 100 million threshold remains applicable;
- the group exemption below HUF 500 million will only apply from 2026;
- from that point on, transactions exceeding at least HUF 150 million will have to be aggregated when assessing the HUF 500 million threshold.
As a result, a situation may arise in which a company is not required to prepare a Local File, but still remains subject to a Master File obligation.
It is this regulatory structure that makes 2025 a genuinely hybrid year.
Transfer pricing data reporting: a real risk point
Transfer pricing data reporting, i.e. the ATP forms to be submitted together with the tax return, has gained significantly in importance in recent years.
In tax year 2025, data reporting:
- is mandatory above HUF 100 million; and
- is independent of any exemption applicable to the Local File.
Based on NAV’s audit practice, the data reporting obligation is clearly not just an administrative requirement.
Rather, it is:
- a risk-filtering tool; and
- the basis for audit selection.
What can companies do now?
In practice, it is advisable to establish a structure already now that complies with the new expectations and the new transfer pricing decree.
Segmented profit and loss statement
The separate presentation of revenues and costs allocated to related-party transactions is key to assessing profitability. Without this, companies may face several difficulties during an audit.
Genuine functional analysis
Instead of template-based descriptions, an analysis based on actual operations is required, demonstrating:
- decision-making competencies
- risk assumption
- value-creating functions
Application of DEMPE logic in transactions involving intangibles
In the case of intangibles, the identification and substantiation of DEMPE functions is essential.
Documentation of pricing mechanisms
The documentation should ideally present:
- the pricing logic
- the calculation steps
- the determination of the cost base
- the mark-up setting
- the process for year-end adjustments
Common errors NAV is expected to focus on
Discrepancies between data reporting and documentation
Differences in transaction values, different profitability indicators, or inconsistent methodologies may significantly increase the risk of a transfer pricing adjustment.
Lack of segmentation
If a company performs several different functions, but presents profitability only at company level, this may distort the arm’s length comparison.
Lack of DEMPE substantiation
In the case of intangibles, the link between income allocation and value-creating functions is a particularly sensitive audit point.
Lack of a benefit test
Similarly, the benefit test will also be a key element during audits. It has long formed part of transfer pricing methodologies, but it is expected to receive even greater emphasis going forward.
The real question is not the threshold
Tax year 2025 should therefore not be regarded as a genuine simplification. Rather, it is a transitional year that lays the groundwork for the audit practice expected from 2026 onwards.
NAV’s audit plan makes it clear that the focus today is no longer merely on meeting value thresholds, but rather on:
- data-driven selection,
- consistency between documentation and data reporting, and
- substantiation of economic substance and benefit.
The real question is not whether companies may rely on the more favourable exemptions in 2025.
The real challenge is whether the remaining time will be sufficient to prepare transfer pricing practices — especially segmentation — for the stricter audit environment expected from 2026 onward. If this preparation is not carried out, a detailed NAV audit may expose the company’s transfer pricing position to significant professional risk.
