On 19 July 2022, the Hungarian Parliament passed a bill introducing important changes to the transfer pricing rules. The law introduces a significant additional reporting requirement for intra-group transactions and requires transfer pricing adjustments to be made at the median.
Entities subject to transfer pricing documentation will have a new reporting requirement. They are required to provide transaction-level details of their controlled transactions in their annual corporate income tax returns. The new reporting obligation applies for the first time to corporate tax returns filed after 31 December 2022, while the new regulation regarding the adjustments applies for the first time to tax years beginning in 2022.
The use of the interquartile range will always be mandatory for comparable searches based on a public database. If the price is outside the arm’s length range, an adjustment to the median of the benchmarking study is mandatory.
The penalty for violating TP documentation requirements will be increased from HUF 2 million to HUF 5 million per intra-group transaction. In case of repeated violations, the maximum penalty will increase from HUF 4 million to HUF 10 million.
