Changes in transfer pricing: simpler but more rigorous rules

At the end of January PricewaterhouseCoopers Hungary organised a business breakfast where Dr Gábor Laki, head of department at the Ministry for National Economy and Anita Mekler, the director of PwC Kft. informed participants about changes in the regulation on keeping the transfer price registry as of 1 January. In general we can say that the administrative burden became smaller for taxpayers but stricter sanctions will be imposed on enterprises if they fail to keep the registry.

One of the biggest simplifications is that a simplified registry-type document can be prepared about intragroup services with a low added value, in case certain conditions are met, e.g. in a fiscal year the market value of the services (calculated without VAT) must not exceed HUF 150 million and 5 percent of the service provider’s sales revenue and 10 percent of the service user’s expenditure. Low-risk services belong to this category, for instance IT, administrative and training services. Breaching the regulation on transfer price registry keeping more than once could result in a fine of HUF 4 million instead of the former HUF 2 million. According to the new law, if the taxpayer keeps the transfer price registry in English, German or French language and tax law issues cannot be clarified any other way, the taxpayer is obliged to provide the tax authorities with an authorised Hungarian language translation of the registry and its supporting documents, before a deadline set by the authorities.