When must related parties prepare transfer pricing documentation?

Related parties are required to apply arm’s length pricing, i.e. transfer pricing, in transactions between them, and depending on the value, they must also prepare documentation.

When does a transfer pricing obligation arise?

In all cases where a company transacts with a related party: sells goods, provides services, or grants loans, a transfer pricing obligation arises regardless of value thresholds. Documentation must be prepared if the annual value of the transaction exceeds the threshold: from 2026 HUF 150 million, until 2025 HUF 100 million. However, a benchmark analysis must be prepared for all related-party transactions.

Exemption from transfer pricing documentation

• small and micro enterprises
• transactions below the threshold even after aggregation
• stock exchange transactions
• transactions with officially fixed or legally determined prices
• transactions covered by an APA
• contracts with private individuals
• cost recharges

The exemption applies to documentation, but NAV may still examine whether pricing complies with the arm’s length principle, therefore it is advisable to retain calculations supporting the appropriateness of the prices.

If you would like to learn more about related parties and transfer pricing, please visit the LeitnerLeitner website! If you are uncertain about your transfer pricing obligations, seek advice from our transfer pricing experts with extensive tax authority experience!

What must transfer pricing documentation contain?

The deadline for preparing the documentation is the filing date of the corporate income tax return (for most companies May 31).

• The Master file presents the corporate group.
• The Local file presents the Hungarian taxpayer and the transaction. It includes the functional analysis, justification of the pricing method, and substantiation of the arm’s length price.
• The benchmark/comparability analysis is a database search or other comparison to determine the market range.
• The transfer pricing data reporting forms part of the corporate 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

• preparation of a transaction map
• data collection and organization of contractual background
• functional analysis
• selection of method and profit indicator
• benchmark and market range
• documentation and internal control

What are the most common transfer pricing documentation errors?

• Related-party relationships are not properly identified
• Documentation is incomplete or outdated
• Benchmark analysis is not relevant
• Services are not economically justified
• The option of using an APA (Advance Pricing Agreement) is not utilized

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