Transfer Pricing: Too Expensive to Ignore

Up to now – Hungary was the first in CEE that introduced statutory transfer pricing documentation requirements in 2003 – very complex transfer pricing requirements pertained to affiliated companies. Therefore, group-pricing should be measured in line with the arm’s length principle and be strictly documented. Moreover, unlike in international practice, the Hungarian transfer pricing documentation obligations cover domestic intragroup transactions too. As tax authorities examine transfer prices very closely, it has become vital for groups to have a consistent, reliable TP-system. This is especially so, considering the record high Hungarian penalties for non-compliance that amount to HUF 2 million (appr. EUR 6,500) per transaction per year.

Taxation of the automotive industry – problems along the chain

The automotive industry plays a significant role in the Hungarian economy; it already makes over 10% of the GDP and employment, while it is the fastest growing sector. Hungary’s strategic geographical location, highly developed logistics and infrastructure, cost effective and high-level production capability determines the country as a regional distribution centre and a service hub for the CEE region.

The protocol is in your hands – is this the end of the world?

As written in our former article about the process of tax controls, the audit ends with handing over a protocol. Is there any hope left in case of negative result and can we challenge the opinion of the tax authority?

In our view, nothing is lost yet, even if you have the minutes of tax audit in your hand: the solution may be in the legal remedies. Referring back to our already cited article, it would be the best to avoid such by acting totally rightful without contextual or even formal mistakes, to have time-to-time health checks to mitigate chances for negative tax audit outcome situations, or finally to involve a tax expert into the process from the very beginning who can represent your interests effectively by knowing the rules of the game. Nevertheless, if sand gets into the machine somehow, there is not all lost by the takeover of the minutes. In this article we show the steps of remedy in details.