The Hungarian Tax Authorities (HTA) continue to prioritize the review of transfer pricing documentation. Tax inspectors strictly examine formal requirements and frequently impose default penalties for non-compliance. The review of transfer pricing data provision is also a major focus during tax audits.
Recent audit experiences indicate that the HTA are increasing their review efforts on transfer pricing documentation, including local files and master files. Tax audits place significant emphasis on the formal requirements outlined in Decree No. 32/2017 (X. 18.) of the Ministry for National Economy on the Documentation Requirements Pertaining to the Determination of the Arm's Length Price (the Decree). Missing or incomplete requirements specified in the Decree may result in default penalties being imposed by the tax authority.
Penalties related to non-compliance have increased since 2022; the maximum penalty can reach up to five million HUF per documentation, and up to ten million HUF for repeated violations. Furthermore, given the modifications to the concept of transfer pricing documentation, these penalties can be applied multiple times per tax year.
