Transfer pricing documentation and data reporting rules undergo comprehensive renewal

The new regulation published at the end of 2025 by the Ministry of National Economy introduces significant changes in the area of transfer pricing documentation and related data reporting. The aim of the amendment is to reduce administrative burdens, combat tax evasion, and support tax audits. However, the amendments also introduce stricter measures in certain areas compared to the current rules, and several clarifications have been formulated. In light of the significantly increased penalty risk in recent years, the new regulation once again places a focus on transfer pricing, and the new regulation will certainly necessitate a comprehensive review and customization of the existing transfer pricing documentation practice.

In this summary, we present the most important changes and novelties without claiming to be exhaustive, while our transfer pricing experts are readily available for deeper understanding and tailored rule interpretation. It is also important to see that the new regulation, by its nature, raises many unanswered questions, so in certain areas, consultations with authorities and requests for rulings will be necessary.

The new regulation reaches taxpayers amidst increased tax audit scrutiny. The official communication of the Hungarian Tax Authority (HTA) has highlighted the examination of transfer prices as a key focus for years, and this is supported by the statistics of the taxpayer yearbook published by the HTA. According to this, in 2024, more than 500 audits were concluded that also extended to the examination of transfer prices applied between related companies, and in 80.7 percent of these revisions, a total tax difference of nearly HUF 8 billion was established by tax inspectors. Additionally, one of the designated thematic audit topics of 2024 was the examination of related transactions deemed risky based on transfer pricing data reporting. In this topic, 98 tax audits were conducted during 2024, of which 80 audits concluded with the establishment of a tax difference of nearly HUF 430 million. In the framework of the transfer pricing examination of taxpayers engaged in manufacturing activities within the corporate group, who are loss-making or achieve very low profits, the tax authority uncovered a net tax difference of nearly HUF 1.1 billion in five audits.[1]

Effective date

The new rules must be applied from the 2026 tax year, but regarding documentation, the taxpayer may decide to apply the new provisions for the year 2025 as well.

Purpose of the changes

The new regulation serves three main purposes:

Reduction of administrative burden: Documentation obligations are simplified: taxpayers may be exempt from preparing the Master file or Local file above higher thresholds, and in several cases, there is an opportunity to apply simplified procedures.

Combating tax evasion: The new rules facilitate the tax authority's access to standardized, IT-manageable data on related transactions. This supports risk analysis, targeted audits, and the reduction of tax evasion.

Support for audits: Through more uniform, structured documentation and more precise regulation, the tax authority will be able to audit transfer prices more easily and effectively.

Key changes and novelties

Below we summarize the main changes brought by the new regulation (the following summary is not exhaustive):

1.     Changes affecting thresholds and transaction types

•  Master file: No Master file needs to be prepared if the annual total value of the taxpayer's related transactions calculated at arm's length does not exceed HUF 500 million.
• Local file and data reporting: The most important relief is that the general documentation threshold is increased: certain transactions are exempt up to HUF 150 million, compared to the previous limit of HUF 100 million. However, it is a tightening that documentation must be prepared for free transfer of funds transactions and cost recharging transactions over HUF 500 million, and data must be provided for stock exchange and regulated price transactions over HUF 500 million in the data reporting form.

In connection with determining the volume of transactions, it is clarified that the official exchange rate of the Hungarian National Bank - valid on the last day of the tax year - must be used to determine the HUF amounts if the transaction value is not displayed in HUF in the invoice or accounting.

The following table summarizes the changes in specific rules for each transaction type:

2.     Main changes related to documentation

The new regulation clarifies the concept of a related transaction: a related transaction is established between related companies even if there is no invoicing between them, but based on contractual terms, products, functions, assets, risks, economic circumstances, or business strategies, the existence of a related transaction can be determined. This may represent a novelty compared to the previous definition in cases where a domestic taxpayer, for example, can be categorized as a limited-risk manufacturer but invoices the finished products it produces to independent parties.

The content requirements of the Local file are slightly modified in several places, the modified rules are more detailed, better aligned with the OECD transfer pricing guidelines, and facilitate comparison with data reporting as follows:

• In the transaction-level documentation, the name according to the transaction naming list of the data reporting and the most characteristic NACE code must be indicated.
• In connection with the other related company involved in the related transaction, the basis of the related company relationship had to be presented, but a new requirement is that if the majority influence is indirect, the intermediate persons and the manner and extent of the majority influence in them must also be presented in the documentation. However, this information may not necessarily be available to the taxpayer, and in larger corporate groups, this will require the identification and presentation of several intermediate holdings.
• The regulation further deepens the requirements expected against the functional analysis, sections to be elaborated, functions, and specifically names the specific expectations related to intangible assets, which prescribe the presentation of DEMPE functions (development, enhancement, maintenance, protection, and exploitation of intangible assets) according to OECD guidelines.
• In the case of service or financial transactions, the benefit test will be a mandatory content element, with which the recipient of the service must substantiate that the service is necessary for its business activity, i.e., the service provides a real economic advantage to the beneficiary, and an independent party would also be willing to use the service under similar conditions or would perform it themselves. In this context, it should be noted that this change is in line with the planned changes to the OECD Transfer Pricing Guidelines for 2026, which, according to the preliminary information available, will also deal in detail with considerations related to the benefit test. In this regard, it is expected that the OECD will publish the expected amendments in the spring of 2026.
• If relevant, the characterization of the parties will be a mandatory content element, which affects the determination of the method and tested party, as well as the pricing.
• The new regulation clarifies at several points the long-standing legislative intent that compliance with the arm's length principle should be assessed based on the segmented financial data of the actually realized, tested transaction. However, this may raise issues in cases where there is no automatic factual position at the end of the year for a transaction, but the pricing allows for a certain degree of plan-actual deviation, and in such cases, the difference between the plan-actual data may result in the actual figures calculated profit level indicator falling out of the arm's length profitability range. However, a certain degree of plan-actual deviation can be a tolerable pricing condition based on Hungarian APA practice, so it is questionable whether the tax audit will take this condition into account in such cases and accept the profitability realized based on the plan figures during its audit.

The regulation also stipulates that these data may not necessarily be available to the taxpayer, as it may happen that the tested party is another related company (which may be either domestic or foreign), and not the taxpayer preparing the documentation. In connection with the segmented financial data used, it is further clarified that they must be determined based on the accounting standards (standards) under which the tested party prepares its officially published individual report. This also establishes at the legislative level the tax audit practice that, for example, Hungarian taxpayers who keep their books in accordance with Hungarian accounting standards cannot base their transfer pricing on group standards, such as IFRS or US GAAP.

Simplifications in Local file regulation, that:

• The presentation of the affected market can be omitted for transaction values below HUF 1 billion.
• For limited risk activities (contract manufacturing, routine services, commission-based distribution, and limited risk distribution), the transactional net margin method and the application of the net profit margin or markup according to the profile can be accepted without separate justification, as well as the determination of the routine entity as the tested party.
• The Local file can be prepared with simplified content (it does not need to include the affected market, business strategy, method, profit level indicator, and tested party selection and database research (benchmark), as well as comparability adjustments) for low value-added services if the conditions prescribed by the regulation are met (it meets the definition of low value-added services and in the case of using such services, the actually achieved net profit margin is at most five percent, or in the case of providing such services, the actually achieved net profit margin is at least five percent), in the case of cost recharges from independent parties exceeding the threshold, or for the free transfer or receipt of funds. However, since the benefit test remains a mandatory element of the simplified documentation, it is questionable how this can be interpreted, for example, in the case of free transactions.

A general tightening is that the transfer pricing documentation, its modification, and the supporting documentation can only be prepared in Hungarian, English or German.

3.     Low value-added services

The new regulation more precisely defines the scope of low value-added services, and unlike the current regulation, it does not narrow this category based on value limits and TESZOR codes, but defines it based on functionality according to the following main principles:

• A service that the taxpayer or its related company does not provide to an independent party;
• Which does not require a unique and valuable intangible asset or does not lead to the creation of a new, valuable intangible asset and in connection with which the service provider does not bear significant risk or does not exercise actual control over the risks;
• Not manufacturing, distribution, financial or insurance activities, or not the extraction, exploration, or processing of natural resources.

The regulation specifically highlights that the rental or leasing of real estate or other assets can also qualify as a low value-added service if the above criteria are met. In this regard, however, it is questionable whether the condition of limited risk-taking can be met in the case of self-owned real estate or assets.

According to the above, if the taxpayer achieves at least a 5% net profit margin in providing such a service, or in the case of using it, the realized profit margin is at most 5%, then the content of the Local file is significantly simplified. According to the NGM survey, the simplification available for low value-added services may affect approximately 2400 transactions and 1400 taxpayers based on previous data submissions.

4.     Consolidation of transactions

The new regulation maintains the main rule of consolidation, but clarifies that incoming and outgoing transactions cannot be consolidated, and it distinguishes five main transaction categories (manufacturing, distribution, service, finance, intangible assets), which also cannot be consolidated with each other.

In this regard, however, numerous interpretative questions may arise, for example, in connection with the accounting of received/granted discounts, year-end adjustments.

5.     Corporate-level database research

The new regulation also details the requirements for corporate-level database research. The formulated requirements essentially reflect the best industry practice to date and the expectations previously published by the tax authority regarding database research, however, minor clarifications, changes can be observed. The main expectations in this area:

• Only independent, operating companies can be included in the sample, however, the regulation does not define what should be understood as independent in this context.
• The data of the three years preceding the examined year must be taken into account, and the financial data used must be available for each of these years. In justified cases, more years can be included in the examination, in which case the financial data used must be available for at least three years.
• Companies that are loss-making at the operating (business) activity level in two consecutive years or in more than half of the considered years must be excluded from the comparative sample.
• If the tested party is a domestic taxpayer, then a geographical comparison must first apply a Hungarian, then a regional (V4, then V4 extended with Bulgaria, Estonia, Croatia, Latvia, Lithuania, Romania, and Slovenia region, finally EU27) filter if the sample size is insufficient. Due to this condition, centrally prepared benchmarks will typically not comply with Hungarian regulations, as in central research, the accepted geographical region is typically the EU27 member states.
• If the tested party is foreign, the database research must ensure that the activities, geographical location, and financial data of the selected companies are comparable to the examined taxpayer. Consequently, in the case of an Asian or American tested party, the use of European databases (e.g., TP Catalyst) will typically not be accepted.
• Comparability must primarily be ensured by filtering based on the activity code (avoiding keyword searches), but comparability must also be checked by examining internet websites.

6.     Content and form of data provision

The new regulation contains minor clarifications regarding data provision. Among these, it clarifies that data in the data provision must always be given in thousand HUF. In addition, the names of profitability indicators are changing, for example, instead of operating profit margin on sales, net margin, and instead of operating profit margin on operating expenses, net profit margin is used. In this context, the new regulation also clarifies the calculation method of frequently used profitability indicators within the interpretative provisions.

Summary

The new rules – although aimed at simplification – in several cases necessitate the presentation of additional points and the review of the documentation and benchmarking practices followed so far. Moreover, as with any new regulation, numerous unanswered interpretative questions arise in this case as well, which can be satisfactorily resolved in the future through HTA guidelines or, in the absence of these, through official ruling requests. Deloitte has conducted numerous ruling request procedures with the tax authority in recent years, which provided guidance on general transfer pricing theoretical questions with extremely constructive and short (a few weeks) deadlines. Since the new regulation is fundamentally based on the concept and approach of reports compiled according to Hungarian accounting rules, in addition to general interpretative questions, further specific interpretative questions due to IFRS-HAS differences also arise for taxpayers compiling their reports according to IFRS.