From the start of 2012, transfer pricing documentation requirements have been simplified but, at the same time, the penalties for non-compliance have increased.
The simplified rules may also be used for the 2011 tax year (for which the documents must usually be prepared by May 2012).
The standard maximum penalty for not having TP documentation will remain HUF 2 million (approx. €6,400) per missing document. However, this can double for repeated violations and quadruple if the repeat violation relates to the same transaction.
Heavily simplified documents may now be prepared for low value adding intra-group services.
There is no longer any need to produce comparables to justify a cost plus mark-up of between 3% and 7% for a qualifying service, unless the taxpayer normally provides or receives the same services to or from unrelated parties at a different price.
The qualifying services are listed in the decree but must also NOT:
- have an annual value above HUF 150 million (c. €480,000), or 5% of the turnover or 10% of the operating costs of the party whose documentation is being prepared, or
- constitute the primary activity of the service provider
The requirement for documentation has also been removed for:
- simple recharging of unrelated party services or goods at cost to related parties (unless this constitutes the primary activity of the recharging entity)
- the gratuitous transfer of funds
- transactions with a total historic value below HUF 50 million (c. €160,000)
- transactions affected by a valid APA
- transactions by a foreign PE whose income is exempted from Hungarian corporate income tax
Finally, transfer pricing documents prepared in English, German or French no longer have to be translated into Hungarian.
Law: Act No. XCII of 2003 on Tax Procedure; Decree No. 22/2009 (X.16.) of the Minister of Finance.
