On 28.12.2022, PM Decree No. 27/2022 (XII. 28.) was published, which amends the Hungarian transfer pricing documentation decree in several points.
On the one hand, the PM Decree introduces detailed rules for the provision of information on the determination of the arm's length price in the corporate income tax return. In addition to the introduction of the reporting obligation, it also changes the interpretation of the concept of transfer pricing reports (the master file and local files per IC transactions will now be considered as separate documents). This, taking into account the increased default penalties introduced with the summer tax package, will mean a significant tightening in the future for the companies obliged to prepare transfer pricing documentation. However, it is a beneficial change that from FY2022, documentation will no longer be required for related party transactions with a market value of less than HUF 100 million (the threshold was HUF 50 million in previous years).
The main changes of the PM Decree are summarised in the table below, comparing them with the previous rules.
| Topic | Previous rule | Change in the rule | Application of the rule |
| Definitions | Definitions relevant for the application of the TP Decree. | Introduction of new concepts, e.g. in relation to characterisation, clarification of the concept of functional analysis, definitions related to financial indicators. | from 31.12.2022 |
| Redefining the concept of documentation | The master and local files are considered as one TP documentation. | The master file and local files per transaction type are considered as separate documents. | for the first time for the tax year starting in 2023 |
| Supporting transfer prices with accounting data | The mandatory content of the documentation is how the financial data used to determine the transfer price relates to the data in the taxpayer's accounts. | The context should be presented at a deeper level of analysis (e.g. general ledger account, cost centre, cost bearer, profit centre, job number). | for the first time for the tax year starting in 2023 |
| Conditions of consolidation | In certain cases, the controlled transactions could be consolidated when preparing the documentation. | Criteria to be taken into account when assessing the consolidation of transactions are defined. | for the first time for the tax year starting in 2023 |
| Transactions excluded from the consolidation | – | Exclusion of the possibility of consolidating closely related but reverse transactions (e.g. purchases and sales of products manufactured from purchased materials, transaction involving costs and transaction involving primarily revenues). | for the first time for the tax year starting in 2023 |
| Threshold for TPD preparation | Transactions of related parties are not required to be documented if the value of the supplies under the contract does not exceed net HUF 50 million at arm's length price in the tax year. | The HUF 50 million threshold will be raised to HUF 100 million. | for the first time for the tax year starting in 2022 |
| Introduction of reporting obligations in the CIT return | – | As part of the corporate income tax return, information on all relevant elements of the TP documentation must be reported (e.g. transaction name, related party details, arm's length pricing method, transaction value and tax base adjustment, indicators used in the transaction, information on transfer pricing and arm's length value / range).
It is important to note that the reporting obligation (with reduced data content) also covers IC transactions that do not have to be documented under the TP Decree (e.g. contract with a private person not being a self-employed person, cost recharge). |
for the first time for CIT return filed after 31.12.2022 |