The Hungary’s Ministry of Finance has issued Decree 20/2013 on 18 June 2013. The decree clarified the transfer pricing documentation obligations of Hungary.
The Decree 20/2013 is designed to decrease the taxpayers’ administrative burden and to make clear some ambiguous provisions of the previous regulation.
The decree has modified definitions of transactions for which the taxpayers do not need to prepare the transfer pricing documentation. According to the new rule taxpayers are not need to prepare transfer pricing documentation for transactions with value not exceeding HUR 50 million in the concerning tax year.
Also, taxpayers are not need to prepare transfer pricing documentation for cost-recharges which were originally charged by third independent parties. However, transfer pricing documentation would need to be made if the services/goods costs are “recharged” to the related parties.
The decree also has modified the acceptable arm’s length profit margins’ limit for low value-added intercompany services. According to the rules the mark –ups values between 3% and 10% will be considered as arm’s length profit margin.
According to the decree, the taxpayer must consider the information of publicly available companies as comparable or which can be validated by the Tax Authority in the procedure of determining the arm’s length prices.
