On 27 October, WTS Klient hosted a transfer pricing webinar featuring Maqsoudi Ali, Head of the Transfer Pricing Department of the Central Management of the Hungarian tax authority (NAV). During the discussion on the 2026 transfer pricing rules and the NAV’s tightening transfer pricing expectations, the tax authority’s expert and Zoltán Cseri, Head of Transfer Pricing at WTS Klient, shared their experiences with more than 50 participants. Below, we summarise the most important takeaways that directly affect the documentation for the 2026 business year.
Higher thresholds, much more detailed content
From tax years beginning in 2026, the new Decree 45/2025 (XII.23.) of the Hungarian Ministry for National Economy will govern domestic Hungarian transfer pricing expectations. The decree also introduces certain simplifications compared to the previous rules:
- the value threshold for local file documentation increases from HUF 100 million to HUF 150 million;
- a master file is only required if the aggregate value of the related-party transactions subject to documentation exceeds HUF 500 million.
However, the substantive requirements have become significantly stricter. These stricter requirements include:
- a more detailed functional and risk analysis;
- a mandatory benefit test for services;
- a DEMPE analysis for intangible assets;
- and, above all, a segmented profit and loss statement: where a company has multiple related-party transactions or independent activities, revenues and costs must be allocated among them up to the operating profit level.
In addition, the decree aligns the local file more closely with transfer pricing data reporting requirements.
The Hungarian tax authority works with growing amounts of data in a targeted manner
During the discussion, it was highlighted that the tax authority already subjects data reporting, CbCR reports and information received through international exchange mechanisms to risk analysis supported by automation, and selects taxpayers and transactions for audit in a targeted manner. In the future, the role of artificial intelligence is expected to increase further. Auditors therefore know what they are looking for and do not stop at reviewing the documentation; they also examine what actually happened in practice.
Loss-making operations are typically under close scrutiny. In the case of a start-up activity or an extraordinary market situation, losses may be accepted if the documentation provides a detailed explanation of their causes. However, for a low-function, low-risk manufacturing or service subsidiary, the expectation is low but stable profitability. Losses, particularly if they persist over a longer period and the group as a whole remains profitable, are generally not considered acceptable.
The biggest practical challenges arising from tightening transfer pricing expectations
According to our experience, the number of tax audits is increasing, and NAV requests more and more information for each transaction, often with a deadline of only 3 to 5 days. The greatest challenges typically include:
- obtaining the actual profitability data of foreign related parties, broken down by activity;
- preparing a segmented profit and loss statement, for which most accounting and controlling systems are currently not equipped;
- for intra-group services (e.g. management fees), collecting e-mails, reports and timesheets evidencing the actual performance and business benefit of the service in addition to the agreement, invoice and documentation. Without such evidence, the expense may become non-deductible for Hungarian corporate income tax purposes;
- the year-end adjustment: if the adjustment is made before the accounting close and settled between the parties, it is sufficient to adjust the result within the arm’s-length range. However, in the case of a tax-base adjustment, the adjustment must generally be made to the median.
Why is it worth starting preparations now?
The local file documentation and transfer pricing data reporting for the 2026 business year must be completed together with the corporate income tax return, by 31 May 2027 for taxpayers following the calendar year.
Although this deadline may seem distant, the documentation covers the current year, and several of its required elements are difficult to reconstruct afterwards:
- segmented data must be generated from the 2026 accounting records, therefore the controlling system should be prepared before year-end;
- documents evidencing the provision of intra-group services must be collected throughout the year;
- profitability should be reviewed before year-end while there is still an opportunity to make adjustments.
Obtaining the additional information required from the group may also take several months, therefore companies should already indicate what information will be needed for the Hungarian transfer pricing documentation.
Given the tightening transfer pricing expectations of the Hungarian tax authority and the more detailed content requirements introduced by the new transfer pricing decree, companies should already review their documentation processes, data requirements and year-round controls. Our experts can assist with preparing transfer pricing documentation, developing segmented profit and loss statements, reviewing the pricing of related-party transactions and mitigating audit risks. Contact us and start preparing your documentation for the 2026 business year in good time.
This article is for general information purposes only and should not be considered as advice.
