Hungary: local rules

Hungary sets the arm's length rule in section 18 of the Corporate Tax Act (Act LXXXI of 1996, Tao.). If related parties use a price different from the arm's length price, the taxpayer must raise or lower its pre-tax profit by the difference. A downward adjustment is only allowed if the other party signs a document and confirms it counts the same amount in its own tax base (s. 18(1)). Section 3(2) of the Act on the Rules of Taxation (Art., Act CL of 2017) also says such deals are taxed at the arm's length price. The documentation rules are in NGM Decree 45/2025 (XII. 23.), in force from 24 January 2026 and used first for tax years that start in 2026. It replaced NGM Decree 32/2017 (X. 18.). For tax years that start in 2025 the old decree still applies unless the taxpayer chooses the new one for some local files (s. 15 of the new decree).

Every company that is not a small enterprise on the last day of the tax year must record the arm's length price, the method and the supporting facts by the time it files its corporate tax return (Tao. s. 18(5)). Small enterprises are exempt, and a micro enterprise counts as small. Medium-sized companies are not exempt. State-majority-owned companies and public-benefit non-profit companies are also outside the rule. For tax years that start in 2026 or later, a local file is needed for each related transaction (or pooled group of transactions) above HUF 150 million at arm's length without VAT (decree s. 4(4)), and a master file is needed only if all transactions that need a local file add up to more than HUF 500 million (s. 4(3)). For tax years that started in 2025 the old decree still applies: the local file limit is HUF 100 million, and a company that needs any local file also needs a master file (old decree s. 1(2) e) and s. 4(1)). Simplified local files exist for low value-adding services and a few other cases. Documents may be in Hungarian, English or German, the local file must be kept at least 8 years, and the records can be amended until a tax audit starts (s. 4(8) to (10)). Separately, the company reports data on each reportable related transaction in its corporate tax return (the ATP-01 and ATP-KV sheets). Under the new decree the data duty does not apply to transactions of HUF 150 million or less.

Section 18(2) lists five methods plus a catch-all: comparable price, resale price, cost plus, transactional net margin, profit split, and another method if none of the five works. The OECD Guidelines are the stated model for the decree. When public or checkable database data are used, the taxpayer must narrow the result to the interquartile range (s. 18(9)). A price inside the range needs no adjustment. A price outside the range is moved to the median, unless the taxpayer shows that another value in the range fits better (s. 18(11) and (12)). Decree section 11 sets rules for database searches: independent and active companies only, three years of data, screening for loss makers, and a local search first, then wider Central and Eastern Europe. The screen must be refreshed every three years and the financial data every year.

Failing to prepare or keep a transfer pricing record can bring a default penalty of up to HUF 5 million per record (per pooled record), and up to HUF 10 million per record for a repeat breach (Art. s. 230(1)). If the same record is missed again the fine can reach four times the first fine, unless more than two years passed between the two failures (s. 230(2) and (3)). The fine can be reduced or waived if the record is made before the decision on the repeat breach is delivered. A failure to report the transfer pricing data in the return is probably covered by the general default penalty of up to HUF 1 million for companies (Art. s. 220), but this was not confirmed. A late, wrong or missing CbC report or CbC notification can be fined up to HUF 20 million under the CbC Act (s. 43/S). Pillar Two filings can be fined HUF 5 million for a missing or late notification and HUF 10 million for a missing, late or wrong return or data report (Art. s. 227/B), but no fine applies for tax years that start before 31 December 2026 if the group acted as could be expected (Art. s. 274/R).

The global minimum tax is in Act LXXXIV of 2023 (the Act LV of 2024 only amended it, for example by adding the advance payment). It covers groups with revenue of at least EUR 750 million in at least two of the four previous years (s. 1(2)). It has a qualified domestic top-up tax (QDMTT) and the IIR from tax years that begin after 31 December 2023, and the UTPR from tax years that begin after 31 December 2024 (s. 53). Each Hungarian group member (or one designated local entity) must notify NAV by the last day of the second month after the year end (s. 44(1)). It then files one electronic return and data report on the NAV form (24GLBADO for 2024, 25GLBADO for 2025) within 15 months after the year end, and pays the tax in the same period (s. 44(9) and (10)). That is 31 March 2027 for calendar 2025. The deadline is 18 months for the transition year, which is the first year the group falls under the Act for Hungary (s. 49 and s. 3 point 15), so 30 June 2026 for calendar 2024. NAV says the tax for a transition year is also paid within the 18 months. A separate QDMTT advance return and payment is due on the 20th day of the 11th month counted from the year end (s. 44(11)). NAV confirms this is 20 November 2026 for calendar 2025. If the group report is filed abroad under a qualifying agreement, the Hungarian entity must name the filer and the place of filing within six months of that filing (s. 44(4)).

Groups with consolidated revenue of at least EUR 750 million file a country-by-country report with NAV within 12 months after the end of the reporting year if the ultimate parent is a Hungarian tax resident, or if a Hungarian group member must step in (Act XXXVII of 2013 s. 43/N). Every Hungarian group member must also notify NAV by the last day of the reporting year whether it is the parent, the surrogate parent or neither, and say who files (s. 43/O). Tax authority rulings on the arm's length price (APAs) are available on request under Art. ss. 174 to 183, with a HUF 10 million fee for a unilateral and HUF 14 million for a bilateral or multilateral procedure. The corporate tax return and the tax are due on the last day of the fifth month after the tax year, so 31 May for a calendar year. There is no separate annual TP form: the data goes into the return.