Transfer pricing

As well as around the world, transfer pricing is one of the priority fields of tax investigations, its growing significance is proved by the dramatic increase in tax penalties from this year.

Taxpayers do not only have to pay attention to be compliant with the arm’s length principle, but they are also obliged to prepare documents in accordance with the Act whose rules were significantly modified as of 2012. However, transfer pricing is not only an obligation, but it is also a great opportunity for tax optimization that is worth making use of by business entities.

Forvis Mazars' advisors have years of experience in all fields of transfer pricing, including transfer pricing documentation, comments, pricing of future transactions, supporting of tax investigations and also the representation in legal cases in transfer pricing

Compliance obligations related to Hungarian transfer pricing rules

As part of the BEPS Action Plan, the three-tiered documentation approach has already been implemented into Hungarian legislation. The Country-by-Country Reporting (“CbCR”) obligation is laid down in Act XXXVII of 2013, while the preparation of the master and local files is regulated by the Ministry of National Economy, Decree 32/2017 (“Decree”). It is essential to point out that transfer pricing related risks are multilevel.

Failing to (fully) meet the requirement of three-tiered documentation approach may be subject to default penalty, whereas the tax shortage assessed by the tax authority may give rise to levying a 50% tax penalty and a default penalty (the amount of which is the central bank base rate plus 5%, and for risky taxpayers, one and a half times the ordinary default penalty), furthermore double taxation may also arise.

Country-by-Country Report

The purpose of the Country-by-Country Report is to provide all competent tax authorities with an overall picture on the whole multinational group expressed in numbers. The tax authorities may utilize the CbCR for tax risk assessment purposes.

The related obligations include:

  • declaration obligation
  • reporting obligation

In case of the non-fulfillment for any obligation: A penalty up to HUF 20 million can be levied.

Master file

The goal is to provide an overview on the operations, business strategy, value creation processes, transfer pricing policy, and taxation status of the whole corporate group.

Local file

This document expressly concentrates on the local operations and aims to analyze the intragroup transactions of the local entity from the perspective of the arm’s length principle.

The new documents will provide tax authorities with wider investigation aspects. Based on the detailed information available (big data), tax authorities may make more precise and more realistic conclusions and more targeted investigation can be carried out whether the profit (tax base) allocated by the corporate group to Hungary is in line with the arm’s length principle, since the overall picture of the various corporate groups is made visible.

Transfer pricing services:


  • Well-designed pricing practices by which the chance of debates with the authorities can be lowered, double taxation can be avoided and taxation can be optimized at group level
  • Participation in the procedures related to the determination of the arm’s length price by the tax authority, assistance, preparation of the relevant documents, countersignature
  • Mapping and management of transfer pricing risks

Preparation of transfer pricing documents

  • Revision of previously prepared documents, commenting from the point of view of Hungarian tax considerations;
  • Preparation of documents, completion and documentation of sub-processes;
  • Updating documents;
  • Preparation of country-specific file and master file;
  • Preparation of benchmarking analyses;
  • Preparation and submission of APA (Advanced Pricing Arrangement);
  • Preparation of documents aligned with the regulations of other countries
  • Preparation of legal documents of the relevant contractual background

Settlement of disputes

  • Advising in official and court cases related to transfer pricing
  • Representation in court cases

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All corporate groups must respond to the continuous changes in the international taxation and economic environment. Old-fashioned approaches and concepts will no longer work or are likely to involve significant tax risks.

Changes always bring about uncertainty and risks!

Operational risks

Is the corporate group able to react and how long does it take to change its operations to adapt to the new requirements and circumstances? How does it respond to the new circumstances? Restructuring? Who bears the burden of cost of restructuring? What comparative analyses are the decisions based on? What adjustments do they perform on comparative data? Who bears the losses due to shut-downs? Are advance pricing agreements still valid with the tax authority? Are intragroup financial transactions to be reconsidered according to the renewed directives (debt vs. equity, credit rating, comparable data)?

Reputational risk:

How will the novelties change the judgementof previous years’ operations.

Administrational risk:

What additional administrational burdens should multinationals expect and what might the cost implications of these be? 
Is your organization prepared to document the inter-company transactions according to the continuously updated OECD 

The data-driven audit practice of the tax authorities enables much more effective and targeted audits than in previous years, for which all corporate groups must prepare in time.


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Our latest news in transfer pricing

Transfer pricing- disclosure obligation

From January 1, 2023, a new disclosure obligation will apply to those taxpayers subject to transfer pricing documentation obligation. The new disclosure obligation shall be completed as part of the complemented 29 and 29EUD forms serving for the purposes of corporate income tax return.

More information

Transfer pricing- Management of year-end transfer pricing adjustments, introduction of new transfer pricing reporting obligation

One of the most essential points of the Tax Bill package approved in Summer was the management of year-end transfer pricing adjustments. Accordingly, as of 2022, if the prices applied or the profit realized by the tested party does not prove to be at arm’s length, the corporate tax base should be adjusted in line with the median value of the arm’s length range, unless the taxpayer provides reasoning why a value other than the median meets the arm’s length principle the most.

More information

Transfer pricing- Significant tightening in transfer pricing regulations in the 2023 state budget proposal

The government has submitted Proposal T/360 on the foundation of the 2023 state budget, which affects several types of taxes. Transfer pricing regulation is highly emphasized in the proposal package, defining significant tightening in the rules, a new reporting obligation, as well as significantly higher penalties and fees of proceedings. The new rules of transfer pricing adjustments may result in a major additional burden for several taxpayers in terms of the extra taxes to be paid.

More information

Transfer pricing-  The end-of-May deadline for preparing the transfer pricing documentation and setting the tax base adjustments

The difference between the arm’s length prices and the applied transfer prices may be settled between related parties by adjusting the original value of the transaction by means of an accounting document/invoice or by adjusting the tax bases. If the time available for notifying the respective amounts to be validated against each other expires due to specific intra-group deadlines (reporting, closing), the tax base adjustment remains the only option. However, this solution carries a higher risk of double taxation. In our newsletter we summarize the most important information related to the above. To read the most important news in our newsletter.

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Transfer Pricing Services

New transfer pricing disclosure obligation

From January 1, 2023, a new disclosure obligation will apply to those taxpayers subject to transfer pricing documentation obligation. The new disclosure obligation shall be completed as part of the complemented 29 and 29EUD forms serving for the purposes of corporate income tax return.

Read more

Transfer Pricing Rules 2024

Mazars- Transfer Pricing Rules – the collection of local country transfer pricing requirements across jurisdictions.

Read more


Nagy Gabriella
Nagy Gabriella Head of International Transfer Pricing Center Budapest

Detailed profile