Taxable persons have a general obligation to prepare transfer pricing documentation in relation to effective contracts concluded with their related parties if performance took place under such contracts, agreements in the current year. The taxpayers qualifying as micro or small enterprises on the last day of the tax year do not have to prepare transfer pricing documentation.
Transfer Price
Hungarian transfer price regulation is in line with the provisions of the OECD transfer pricing guidelines.
In related party contracts, the parties must apply prices that are identical with the prices that independent parties would apply under similar circumstances. If, in the contracts or agreements concluded between them, related parties apply prices higher or lower than the consideration that independent parties would apply under similar circumstances, they must or may adjust their tax base by the difference between the arm's length price and the consideration actually applied.
The taxpayer must increase its pre-tax profit by the amount of the difference if, as a result of the difference, it achieved lower pre-tax profit than it would have achieved if the arm's length price had been applied.
If the taxpayer achieves a higher pre-tax profit than it would have achieved if the arm's length price had been applied, it may reduce its tax base, provided that certain conditions are fulfilled.
Advance Pricing Agreement (APA)
Upon request, the Hungarian Tax Authority defines in a resolution the method to be applied for determining the arm's length price in a future transaction between related parties, the facts and circumstances serving as the basis for determining the arm's length price or price range, if it can be determined. In the case of a bilateral or multilateral procedure, an agreement between the Hungarian tax and customs authority and the competent foreign authority is necessary for the resolution to be effective. An advance pricing agreement procedure can be unilateral, bilateral or multilateral. If a legal regulation of a foreign state concerning income taxation is also applicable, the related party must indicate in its request its choice of unilateral, bilateral or multilateral procedure for determining the arm's length price.
Transfer Pricing - Report Threshold
Related parties are not obliged to prepare transfer pricing documentation if the total value of performance under their contract does not exceed HUF 150 million threshold in the tax year at the arm's length price calculated without value-added tax. The value of performance under the contracts, which can be consolidated for transfer pricing purposes, has to be considered on an aggregate basis for the purpose of this value limit. In addition, no transfer price documentation obligation applies if consideration of supplies of goods or services is recharged to a related party or related parties at an unchanged amount or value provided that the supplier of the product or service is not a related party of the taxable person and the party paying the cost and the recharged annual amount does not exceed the HUF 500 million limit.
The arm's length price is determined using one of the following methods:
- comparable uncontrolled price method,
- resale price method,
- cost plus method,
- transactional net margin method,
- profit split method,
- or other method if the arm's length price cannot be determined with the above methods.
Upon request, the tax authority determines the arm's length price that may be applied in a future related party transaction in a resolution (Advance Pricing Agreement, APA). APA is subject to a fee of 10 million forints in unilateral proceedings and 14 million forints in bilateral or multilateral proceedings. Preliminary consulting costs 500 thousand forints per consulting session.
Transfer Pricing - Local file
A mandatory element of transfer pricing documentation is the local file for each local member company. In terms of content the local file is similar to the stand-alone transfer pricing documentation prepared under the previous transfer pricing regulation. However, this document should already contain a number of additional elements that were previously not a part of the documentation. Such details include for example the description of the management structure or the decision-making and reporting processes. The preparation of the local document is in all cases the responsibility of the local member company.
Transfer Pricing - Master file
As part of the transfer pricing record, the master file should provide a comprehensive view of the entire company group. Due to its complexity and comprehensive nature, this document is typically compiled by the ultimate parent company or central company. However, depending on the transfer pricing regulation in the country of the parent company or the examination of the price / value ratio, it may still become the task of the Hungarian member company. As of 2026, a master file has to be prepared if the total annual intra-company transaction value exceeds the HUF 500 million limit.
Transfer Pricing - Arm's length price
Transfer price is the price that related parties apply in the transactions conducted between them. The arm's length price is the price that independent parties apply or would apply under comparable circumstances.
If the transfer price is different from the arm's length price, the taxpayer may be obliged to increase its pre-tax profit or may have the opportunity to reduce its pre-tax profit for corporate tax purposes.
Transfer Pricing - CbC Report
Under BEPS Action 13, all large multinational enterprises (MNEs) are required to prepare a country-by-country (CbC) report with aggregate data on the global allocation of income, profit, taxes paid and economic activity among tax jurisdictions in which it operates. This CbC report is shared with tax administrations in these jurisdictions, for use in high level transfer pricing and BEPS risk assessments.
Currently, multinational corporations with annual revenues of at least EUR 750 million are affected by regulation.
