Important date: Transfer pricing documentation deadline is approaching

Companies subject to the transfer pricing documentation requirement should also comply with their transfer pricing documentation obligation latest by the date they submit their 2023 corporate income tax returns. Since last year, there is also an obligation to provide TP related data in the CIT return.

As known, companies whose financial year is the same as the calendar year should submit their 2023 corporate income tax returns by 31 May 2024 at the latest, thus the transfer pricing documentation for 2023 should also be available by then. Also, from that date onwards the tax authority is entitled to request it for tax audit purposes. Generally, companies are exempted from the transfer pricing documentation obligation if they qualify as small enterprises under the Hungarian SME Act. However, it should be remembered that for the purposes of such qualification the standalone financial indicators of a company should be taken in aggregate with the indicators of its wider group of companies (domestic and foreign ones). Therefore, a company with individual indicators under the SME threshold may not qualify for the SME status, because at group level it exceeds the threshold.

The most commonly used tool to support an arm’s length price is business information databases used to perform the necessary research and statistical analysis. When selecting an appropriate database, quality considerations should prevail over the amount of data in a database; further, various databases available on the market may have different limitations. The quality requirement also applies to the preparation of transfer pricing documentation, as the tax authority is increasingly examining not only the existence of the documentation, but also its content.

VGD Hungary has many years of experience in preparing transfer pricing documentation and supporting taxpayers in the transfer pricing audits by the tax authority. VGD Hungary's tax experts use several quality databases approved by the tax authorities and constantly monitor the latest developments in both domestic and international legislation. VGD Hungary prepares the Local Files of the transfer pricing documentation to a high professional standard, and assists in the review and adoption of the Master Files prepared by the foreign parent companies, so that they could comply with the Hungarian legal requirements. Furthermore, as part of our transfer pricing advisory services, we provide assistance in developing the transfer pricing principles applicable to your business.

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Should you have any questions as regards the transfer pricing rules
the tax experts of VGD Hungary will be pleased to assist you.

This newsletter provides general information and does not constitute tax advice.