One of the most important requirements is that taxpayers must provide data on their transactions with their affiliated parties in the corporate tax return. The detailed rules – exactly what information and data must be included in the corporate tax return – are not yet known. However, in addition to the data of the affiliated companies and the nature of the transaction, the tax return must certainly include the method used to determine the arm’s length price, the market price range, and the transfer price. The scope of the data to be included in the tax return can be determined only if the taxpayer has prepared at least the part of the documentation related to the determination of the arm’s length price which specifies the determination of the arm’s length price. Therefore, if taxpayers who have a commercial relationship with their affiliated parties do not have all this information by the deadline for submitting the corporate tax return, they will not be able to legally fulfill their tax assessment obligation.

Taxpayers who have not previously prepared their documentation on the determination of the arm’s length price will be in a more difficult situation when preparing corporate tax return fo FY2022, as the preparation of the documentation, the selection of the appropriate transfer pricing method, and the preparation of comparative data may take longer.

The other important change is that, in the case of database filtering, if the taxpayer’s profit margin is outside the interquartile range, the corporate tax base must be adjusted to the median value, not to the currently used lower quartile value. In practice, this means that the taxpayer may have a higher corporate tax base and thus a higher corporate tax liability. It is worth preparing for the taxpayer to have the results of the database filtering available in advance, because in this case, he can correct the prices used in transactions with affiliated companies during the 2022 financial year, during the year, or he can even issue a correction invoice.

In addition to the increase in the obligations of taxpayers, in the event of a violation of the rules on the preparation of transfer price documentation, the fine that can be imposed in the absence of transfer price documentation will increase to HUF 5 million, and in case of repeated failure to HUF 10 million.

Due to the general nature of our newsletter, please contact our staff regarding the personalized interpretation of its contents, so that we can support you in the area of compliance with new and even previously effective legal obligations related to transfer price documentation.