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New Regulations on the Transfer Pricing Documentation in Hungary

New Regulations on the Transfer Pricing Documentation in Hungary

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A new decree was issued by the Ministry for National Economy in October 2017, introducing a three-level, standardized approach relating to the transfer pricing documentation (including the master file, the local file, and the country specific report) from 2018.

The new regulations considerably extend the requirements for the content of the documentation, prescribing a much wider range of information to be disclosed relating to the organization structure of the whole company group, the controlled transactions and the benchmark analysis.

In the local file, the required information must be disclosed as a controlled transaction, however, the aggregation rules and the simplification option for low value added services can be applied. In this latter respect, the profit margin range has been modified from 3-10% to 3-7%.

The new rules are applicable to the transfer pricing documentation prepared for the tax year 2018, however the taxpayer may also choose to apply the provisions of the new regulations for the tax year 2017. The decree entered into force on 17 November 2017.

By Gabriella Galik, Partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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