Forvis Mazars: the new transfer pricing regulation will enter into force on January 23

The new transfer pricing regulation and transfer pricing data provision will enter into force on January 23 – the announcement reminds us.

The tax advisor explains: the new regulation simplifies documentation obligations in several respects, but at the same time sets out more detailed expectations, for example, in the areas of the utility test, database searches and segmentation.

One ​​of the most important innovations of the regulation is the increase in documentation thresholds: in the case of a local document, the threshold calculated per consolidated transaction, at normal market price and excluding VAT, has increased from 100 million forints to 150 million forints.

A main document must only be prepared if the total value of the taxpayer’s transactions subject to the local document preparation obligation, calculated at normal market price and excluding VAT, exceeds 500 million forints. It is not necessary to prepare a main document if the total annual value of the related transactions exceeds this value limit, but they do not individually reach the local document preparation threshold – they informed.

In the case of cost transfers, it is also sufficient to prepare a simplified local document above the 500 million forint limit, which, according to the new regulation, will also include a functional analysis.

The regulation introduces significant changes in the pricing of low-value-added services and stipulates that a utility test must be performed in the case of the use of financial or non-financial services, which must be documented to determine whether the given transaction was actually necessary for the taxpayer’s business activities.

According to the information, detailed regulations also apply if the tested party carries out multiple activities, and separate transfer pricing analyses are prepared for each activity. In such cases, the segmentation and presentation of corporate data is mandatory.

In contrast to the draft regulation, according to the final regulation, transfer pricing records can be prepared in Hungarian, English and German, they explained.

According to the tax advisor’s experts, those affected may decide to apply the provisions of the new regulation to the tax year starting in 2025, however, in the case of tax years starting in 2026, the application of the new rules will be mandatory.