When must related enterprises prepare transfer pricing documentation?

Related enterprises are required to apply the arm’s length principle when determining prices for transactions between them and, depending on the value of the transactions, they are also required to prepare transfer pricing documentation.

When does a transfer pricing obligation apply?

Whenever a company enters into transactions with a related party – such as selling goods, providing services or granting loans – a transfer pricing obligation arises, regardless of any value thresholds. Transfer pricing documentation must be prepared if the value of the transaction exceeds the applicable threshold in a given year: HUF 150 million from 2026 and HUF 100 million up to 2025. However, a benchmarking analysis must be conducted for all transactions with related parties.

The following entities are exempt from the obligation to prepare transfer pricing documentation:

• Small enterprises / micro-enterprises
• Transactions that remain below the threshold even after aggregation
• Stock exchange transactions
• Transactions with prices specifically determined by authorities or by law
• Transactions covered by an APA (Advance Pricing Agreement)
• Contracts concluded with private individuals
• Cost recharges

The exemption applies only to the obligation to prepare transfer pricing documentation. However, the NAV may examine whether the pricing complies with the arm’s length principle. Therefore, it is advisable to retain calculations supporting the arm’s length nature and appropriateness of the prices applied.

If you would like to learn more about related enterprises and transfer pricing, visit the LeitnerLeitner website!If you are unsure about your transfer pricing obligations, our transfer pricing experts with extensive experience in dealing with tax authorities will be happy to advise you.

What must transfer pricing documentation contain?

Transfer pricing documentation must be prepared by the date of submission of the corporate income tax return (31 May for most companies).

• The Master File provides an overview of the multinational enterprise (MNE) group..
• The Local File describes the Hungarian taxpayer and the relevant transaction. It includes the functional analysis, the justification for the selected transfer pricing method, and the substantiation of the arm’s length price.
• The benchmark/comparability analysis is a database search or another form of comparability analysis used to determine the arm’s length range.
• Transfer pricing information reporting forms part of the corporate income tax return..
• The Country-by-Country Report (CbCR) is often referred to as the third level of transfer pricing documentation.

Steps for preparing transfer pricing documentation

• Transaction mapping
• Data collection and organisation of the contractual framework
• Functional analysis
• Selection of the transfer pricing method and profit level indicator (PLI)
• Benchmark/comparability analysis and determination of the arm's length range
• Documentation and internal control procedures

What are the most common mistakes in transfer pricing documentation?

• The related-party relationship is not properly identified.
• The transfer pricing documentation is incomplete or outdated.
• The benchmark/comparability analysis is not relevant.
• The economic justification for the services is not adequately substantiated.
• The option of an APA (Advance Pricing Agreement) is not utilised.

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