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Transfer pricing data reporting 2023: experience and obligations

This year was a turning point for companies in the field of transfer pricing, as they were required to provide information on the determination of the arm's length price in their corporate income tax returns. We have collected the main issues and topics that have caused the most problems for companies when preparing their 2023 transfer pricing data reporting.

New transfer pricing data reporting obligation

The PM decree published at the end of 2022 imposed a new transfer pricing reporting obligation on companies. Under the new transfer pricing decree, from 2023 taxpayers are also required to report certain transfer pricing data in their CIT returns.

New transfer pricing data reporting obligation – who are affected? 

According to the new decree, the transfer pricing data reporting obligation no longer applies only to companies whose financial year ended on 31.12.2022 corresponding to the calendar year, but also to companies whose financial year had ended earlier, before the PM decree and the detailed rules were published. 

Therefore, companies with a tax filing deadline in 2023 also became subject to TP data reporting and had to submit ATP forms as part of their corporate income tax return.  This obligation also applied if the company had filed its tax return before the entry into force of the new decree but the final deadline for filing the return was 2023.

Therefore, in many cases, the CIT return filed in 2022 had to be adjusted afterwards by supplementing the transfer pricing data. 

Partial transfer pricing data reporting obligation

During the data reporting period, we found that transactions that were not required to be included in the transfer pricing report based on the legal requirements were omitted from the data reporting. 

However, even though these transactions are not subject to the transfer pricing recording obligation, they are not exempt from the data reporting obligation. 

Under the new transfer pricing decree, if the arm's length value of the transaction reaches HUF 100 million in the tax year, companies are subject to a partial data reporting obligation for: 

  • a contract concluded with a private individual not acting as a sole trader, and/or 
  • transfer or receipt of funds without consideration, and 
  • recharge of independent party supply to a related party without markup. 

Common difficulties with transfer pricing data reporting

1.Banded TP pricing

Sometimes companies must report data on transactions where the applied price is not a single price, but where, for example, the parties use banded pricing. However, the form does not allow more than one applied price.   

In such cases, the calculation of an average price and its inclusion in the form could be a semi-solution.

2.TP treatment of complex transactions

It is also a common problem that service transactions tend to consist of several service elements that cannot be construed separately but have different pricing or different arm's length price ranges.  In this case, it is again not possible to report more than one applied price and more than one arm's length range for the purposes of data reporting. 

Transactions where there were hundreds or thousands of transactions during the tax year were particularly burdensome as they had to be reported individually.

3.Content of the transfer pricing data reporting

The content analysis of the data reporting is expected to become an increasingly important part of the tax authority's risk analysis and tax audit perspectives. Therefore, it is of utmost importance that the 2023 transfer pricing data reporting should be completed appropriately, in a timely manner.

Companies often face difficulties in interpreting transfer pricing regulations and complying with the rules, and the risk of penalties has recently increased.  RSM Hungary's team of transfer pricing experts has assisted in the preparation of compliant transfer pricing records and benchmark studies in almost all sectors over the past decades.

As such, our tax advisors have extensive TP documentation knowledge and are familiar with common or unique issues and best practices related to transfer pricing data reporting. 

Contact the RSM transfer pricing experts.

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