• Register
Return to: Home > News > Standards > Hungary introduces stricter transfer pricing requirements

Hungary introduces stricter transfer pricing requirements

Hungary has implemented the OECD recommendations for BEPS Action 13 on Transfer Pricing Documentation and Country-by-Country Reporting (CbCR) introducing stricter requirements for companies to comply with.

The CbCR rules which were introduced in May 2017 and effective for FY16 information are fully in line with the OECD’s minimum standards, the obligation applies for multinational group of enterprises with a yearly consolidated turnover of at least EUR 750m ($ 923.3m).

Companies found non-compliant face a default penalty of HUF 20m ($ 78,000), which according to Niveus Consulting Group (DFK International) is the highest of all local tax related default penalties in Hungary.

The new transfer pricing documentation requirements were introduced in October 2017 and are effective as of FY18.

“[They] prescribe a mandatory application of the Masterfile + Local File concept for all Hungarian entities obliged for documentation (medium and large size companies) even if the related parties have no multinational presence or cross-border transactions,” Niveus Consulting Group said in a statement. “The content requirements have been strongly extended compared to the previous regulation which will dramatically increase the administrative burden of the taxpayers concerned, thus they definitely have to rethink and likely to rework their previously developed documentation practice.

According to the firm this will result in an increased attention on transfer pricing by the Hungarian National Tax and Customs Administration which may result in more comprehensive audits and growing likelihood of non-compliance penalties.

Niveus Consulting Group’s Transfer Pricing Partner, Janos Giraszin said: “Transfer pricing has priority during tax investigations for several years and thanks to the new rules, an even stronger emphasis will surely be put on this topic. From now on, being well-prepared is a must for all taxpayers.”

“The rules for Advance Pricing Arrangements (APA) have been also modified, resulting a more favourable system for taxpayers,” Niveus Consulting Group’s Tax Partner, Lajos Bagdi said. “It is highly recommended to consider the possibility of obtaining an APA since it is a perfect tool to eliminate transfer pricing risks and furthermore, transactions covered by an APA are exempted from documentation obligation.”

Top Content

    South Africa: sensing new opportunities

    It has been an interesting couple of years for the profession in South Africa. A number of high-profile scandals have brought the profession and the role of auditors into sharp public focus, brewing a distrust towards accountants and a large expectations gap. Joe Pickard reports.

    read more

    Ghana: a quest for consistency

    Ghana’s current economic profile would suggest a fertile landscape for purveyors of accounting services. But inconsistent approaches to compliance and application of standards – coupled with problems in the banking sector and consequent liquidity constraints – have created a challenging environment. Paul Golden writes.

    read more

    Drone technology: audit takes to the skies

    The movement towards a digitised era has already impacted the auditing profession in a number of ways, from blockchain to artificial intelligence. Now firms are taking to sky and using drone technology in their audits. Mishelle Thurai speaks to Big Four firms to find out more.

    read more

    SBC: a new alliance joins the market

    Jonathan Minter speaks to Paul Tutin, chair of founding firm Streets Chartered Accountants, about why the business and its European partners took the decision to launch their own association.

    read more
Privacy Policy

We have updated our privacy policy. In the latest update it explains what cookies are and how we use them on our site. To learn more about cookies and their benefits, please view our privacy policy. Please be aware that parts of this site will not function correctly if you disable cookies. By continuing to use this site, you consent to our use of cookies in accordance with our privacy policy unless you have disabled them.