Business contracts concluded between related parties fall under transfer pricing reporting obligations if no exemption is applicable for the transaction.
Pursuant to the decree of the Ministry of National Economy implemented on the 28th of December, 2022, the taxpayer must provide information in the corporate income tax return if the taxpayer has a contract in effect with an affiliated company and the transaction was performed in the tax year.
For taxpayers with a business year that corresponds to the calendar year, the data provision must be completed in the corporate income tax return for the tax year with a balance sheet date of December 31. The corporate income tax returns must be prepared and submitted by May 31 of the year following the tax year at the latest.
For taxpayers with a business year that differs from the calendar year, the obligation applies first to all tax returns that are to be submitted for tax years beginning after January 1st, 2022. The tax returns must be submitted by the end of the 5th month following the balance sheet date.
The data requested by the decree of the Ministry of National Economy are usually available in the transfer pricing documentation of Hungarian companies and their company groups.
There is a significant change in the conceptual system of the structure of transfer pricing documentation, too, as Hungary adopted the OECD’s transfer pricing documentation model. In previous years, the master file and the local file together constituted one document for each tax year. However, from the tax year starting in 2023, the master file and the local file will be considered separate documents. As of 2023 the local file must be prepared per transaction or per consolidated transaction, the deadline for the preparation of the local file is the filing date of the corporate income tax return (see above). The master file provides a high-level overview on a group level about the company’s global operations and transfer pricing policy. The deadline for the preparation of the master file is adapted to the ultimate parent company, but no later than 12 months after the last day of the tax year.
Master files are prepared on a group level usually by the ultimate parent company. The local file must corresponds with the master file, we can cooperate in the preparation of the local file upon request if the master file and other essential information for the preparation of the documentation is provided.
The transfer pricing documentation must be prepared with a few exceptions.
