Tax issues related to transfer pricing are a challenge, and if not handled properly they can easily result in the largest tax burden for multinational companies, or even significantly jeopardise their profitability. Double taxation can arise in the countries affected, which is very difficult to correct based on the provisions of international tax treaties, while tax penalties and the impact of tax base adjustments on loss carry forwards can likewise cause problems. Confrontations between tax authorities can lead to endless disputes as well.
Review of applied prices
Experience from the last few years has shown that the Hungarian tax authority does not just look at whether documentation actually exists, holding out the prospect of penalties amounting to several thousand euros if it is missing. Increasingly, the arm’s length nature of the prices applied is examined in almost every industry now, or even for special intra-group financing transactions. Transactions that are not properly documented and changes in pricing that are not carefully thought through in advance can constitute a significant risk factor for a group company. As a foreign investor, the 9% rate of corporate tax in Hungary may not initially seem too high, but we cannot forget that pricing adjustments within the group can have an impact on other types of tax as well, such as local business tax or value added tax.
Transfer pricing consulting – dedicated professionals
To deal with these problems we set up a separate team in the field of transfer pricing consulting. We have experience in preparing the necessary documentation and in providing effective support during tax authority inspections. We have considerable industrial expertise, including knowledge on how to manage and support transactions of suppliers in the automobile sector and any tax inspections. The expertise we have gathered is not limited just to Hungary. WTS Klient Hungary is also a member of the WTS Global transfer pricing consulting team. As a member of this team we endeavour to find solutions to seemingly impossible problems with the help of personal contacts, regular training and consultations, and relying on the WTS Global central TP team.
Key services in transfer pricing consulting
- Assessments, consulting and identifying problems regarding transactions in face-to-face meetings with the financial management and managing directors of the companies involved.
- Preparation and review of all the documentation, and updating this with the help of well-known international databases also used by the Hungarian tax authority.
- All-round support during tax inspections, professional help in preparing observations and appeals in the event of adverse findings.
- Expert advice and assistance with hearings for cases at courts.
- Preparation of APA (Advance Pricing Agreement) requests in the case of more complex matters, possibly affecting permanent establishments.