Hungary has sharpened its transfer pricing regime in recent years, with more focus on substance and a more combative approach to adjustments. The following article considers this increased scrutiny and what it means for taxpayers.
Hungary has had transfer pricing rules in place for at least 20 years, which from 2003 has included the requirement to prepare transfer pricing studies of certain transactions in line with OECD expectations. To begin with, the tax authority focused only on whether the administrative requirements were met. However, in later years it has increasingly scrutinized the substance of these studies and is ready to adjust taxpayers’ tax bases if it disagrees with the arm’s length price as determined by the taxpayer. The resulting tax disputes are now coming before the courts with some interesting results.