Worldwide transfer pricing reference guide 2014

Hungary (continued)
Documentation requirements (continued)
• If consolidated transfer pricing documentation is prepared (one documentation covering several similar or strongly interrelated
transactions), reasons for consolidation have to be provided
According to Decree 22, a taxpayer can choose to prepare “separate” or “joint” documentation. By introducing the joint transfer pricing
documentation option, the Decree essentially adopted the regulations regarding the Masterfile concept as included in the EU’s Code
of Conduct on transfer pricing documentation. The joint documentation consists of two parts: common documentation containing
standard information on the members of the group within the EU (i.e., Masterfile) and specific documentation describing the agreements
concluded between the Hungarian taxpayer and its related parties. Taxpayers must declare to the tax authority (on the CIT return) which
type of transfer pricing documentation they would like to prepare (either the single documentation or the joint documentation).
The common document has to be prepared with respect to the member states of the European Union and should also include the
controlled transactions carried out between third-country companies and EU group companies.
The obligatory elements of the common documentation are the following:
• A general description of the business and the business strategy of the enterprise including the changes from the previous year
• A general description of the organization, the legal and operational structure of the group (including an organizational chart, a list of the
group members, and a description of the parent company’s participation in the operation of its subsidiaries)
• A list of the related parties carrying out controlled transactions with group members within the EU
• A general description of controlled transactions (list of the significant controlled transactions, e.g., sale of tangible fixed assets, provision
of services, development of intangible assets and provision of financial services including the values of these transactions)
• A general description of the functions and risk, and the changes in these compared to the previous year
• Information on the ownership of intangible assets and on royalties paid and received
• A description of the group’s transfer pricing policy or transfer pricing system
• Cost contribution agreements and APAs relating to the determination of the arm’s length price and court decisions on the arm’s
length price
• Date of preparation and modification of the documentation
The country-specific documentation must include the following information:
• Name, registered seat (official location) and tax number (or company registration number and the name and seat of the registering
authority) of the related party
• Description of the business enterprise and the strategy of the business enterprise including the changes compared to the previous year
• Subject of the agreement, description of the transactions, value of the transactions, signing date (amendment date) of the agreement,
period during which the agreement is effective
• Comparable search (characteristics of the service provided and/or goods sold, functional analysis, contractual conditions, economic
circumstances)
• Description of the comparable data
• Transfer pricing policy of the group
• Preparation date and modification date of the documentation
Based on the work of the European Union Joint Transfer Pricing Forum, in 2012 Decree 22 introduced low value-added intra-group
services in the Hungarian transfer pricing regulations. Low value-added intra-group services are typically routine services provided
between related parties outside the scope of main business activity (e.g., information technology services or administration services).
For these services, taxpayers may prepare transfer pricing documentation encompassing a relatively less-detailed technical analysis.
According to the amendment of Decree 22 in 2012, this type of documentation is applicable if the value of the transactions does not
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