Transfer price rules in Hungary – obligors, elements of documentation, and penalties

The first is that a taxpayer having an affiliated company must examine is whether, on the basis of its main indicators, the preparation of a transfer document is required, or it is sufficient only to apply the basic transfer price rules.

Requirements covering reporting and tax base correction obligations are considered as basic transfer price rules. It is the obligation of all taxpayers with affiliated companies to report the name of their affiliated company to the tax authority within 15 days after the conclusion of the first contract. This reporting obligation must be fulfilled even if – based on the agreement – there is no transaction between the parties in the tax year.


  • Companies classified as small-size companies, non-profit organizations, and companies under the majority influence of the state are exempted.
  • Also, specific transactions can be exempted, for example, contracts concluded with private persons, cost recharges, or transactions on market price which not exceeding 50 million HUF (aggregated) are not to be included in the documentation.


NGM order nr. 32/2017 includes Hungarian transfer price regulations.

The transfer price documentation has 2 main elements:

  • Master File: this document includes group-level information.
  • Local File: this document includes specific information on the operation of the local company.

The register must be completed fully for each tax year, it is not enough to only complete it from year to year.

Content of the Master file

The aim of the Master file is to provide a comprehensive summary of the group strategy and business operations.

According to the NGM order nr. 32/2017. the Master File should contain the followings:

  • Structure chart of the group including ownership structure and geographical position of the group members.
  • Presentation of the group operation:
    • the drivers of business results;
    • the internal and external factors that have the greatest impact on the business results of the group;
    • presentation of the supply chain for the five largest products and services of the group, as well as for products and services with a turnover exceeding 5% of the group’s turnover;
    • presentation of significant service agreements between the members of the group and a brief description of the agreements;
    • a brief functional analysis showing the added value contribution of each member within the group;
    • presentation of transactions related to significant business reorganizations, acquisitions, and sale of business lines during the business year.
  • Presentation of intangible assets:
    • development and ownership of intangible assets;
    • significant research services and license agreements;
    • general presentation of transfer price rules of the group with regard to research and development and intangible assets.
  • Presentation of financial transactions:
    • presentation of general financing transactions of the group
  • Presentation of the group’s financial and taxation position
  • Date of the preparation of the Master file.

 Content of the Local file

The aim of the Local file is the presentation of the contracts and controlled transactions between the taxpayer and the related companies.

The Local file contains two parts. On one hand, it includes the presentation of the company, its place in the organization structure, and participation in the value and decision chain. In the second part, the presentation of the market price must be shown on a transaction-by-transaction basis using one of the mandatory methods. The related parties involved in the transaction must be presented in detail, the contracts related to the transactions, all their amendments are part of the documentation, therefore they must be attached.

The deadline of preparation the transfer price documents is the same as the deadline of the Corporate Income Tax return submission. 


  • Failure to report the affiliated company (within 15 days after the conclusion of the first contract, within 15 days after the termination of the affiliated relationship, within 15 days after cash receipt) -> Default penalty up to 500 thousand HUF per each missing report
  • Violation of market price principles (applying a price different from the normal market price to affiliates) -> Tax shortage due to failing to modify corporate income tax / local business tax/innovation contribution, etc. tax base (the difference between market price and applied intercompany price). Tax penalty up to min 50 percent/max 200 percent of the tax shortage. Delay penalty equaling with 2-times of the central bank’s base interest rate.
  • Failure to prepare the transfer price documentation or incomplete preparation -> default penalty/documentation: up to 2 million HUF (for the first mistake) / default penalty up to 4 million HUF (in case of repeated failure) / default penalty up to 8 million HUF (in case of further repeated failure)
  • Failure to prepare /submit the Country-by-Country report, overdue performance of the reporting obligation -> Up to 20 million HUF default penalty per each missing report or submission

We hope our summary is useful to you.  If you need help in preparing your transfer price documentation, feel free to contact BPION consultants!

Read more on our blog!

New group taxation rules in the Hungarian Corporate Income Tax (CIT) system

Accounting & Taxation in Hungary


Rafał Nadolny
MD Poland,

Daniela Zsigmond
MD Romania,

Tamás Kovács
MD Hungary,

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