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News Documentation obligation

Dear Clients!


We wish to inform you herewith that the regulations applicable in Hungary for the documentation obligation related to the determination of the arm’s length price will change soon. The draft of the new regulation is available at the following site: 




In our opinion the biggest change is to be expected concerning the types of documentation that taxpayers can select from.


At the present taxpayers can opt for the individual documentation, the common documentation and the „simplified” documentation applicable for low added value intra-group services. According to the draft, the individual and the common documentation would be replaced in the future by a documentation consisting of two parts (the masterfile and the local file). The local file would be subdivided into two sub-parts: the presentation of the taxpayer and the presentation of the inspected transaction.   


In the attachment in a tabular form, you find a comparison of the relevant provisions of the current regulation (decree) and the future draft, including also the scope of data to be given in respect of the individual themes. For instance, in the future the documentation should contain the factors influencing the business profits, the turnover data realised in the supply chain of the products exceeding 5% of the group’s total turnover, the contribution of the individual actors (intra-group members) to the value creation shall be presented, and information shall be provided also about the important business restructurings, the group’s intangible assets, about the intra-group financial activities, the group’s financial and taxation position, the organizational chart of the management of the taxpayer, the taxpayer’s strategy, the list of key competitors, etc.


The expected legislative changes will bring much more administrative obligation to the taxpayers, since they shall have to transform their documentation templates used so far, reshape their information gathering processes with regard to the widened scope of the data to be submitted and they will have to update also the data content of their documentations existing on their related transactions, where fulfilment will take place in 2018, too.


The draft regulation also includes, that the advance pricing arrangements (APAs) related to the allocation of incomes realised at group-level and other tax assessment rulings (for e.g. conditional tax assessment arrangements) shall be enlisted, their content briefly described and the copies of the types of documents related to the controlled transactions shall be also attached, if those were issued not by the Hungarian tax authorities.


The draft legitimizes the verification practice that the data base filterings shall be repeated at least in every three years, but in the interim years it is sufficient to update only the financial data of the enterprises considered to be comparable.  


The local file shall be prepared till the submission deadline of the taxpayer’s corporate tax return, while the documentation corresponding to the masterfile shall be prepared at the latest within 12 months from the last day of the tax year of the taxpayer. 


A documentation with simplified data content applicable for low added value intra-group services could be prepared by taxpayers in the future only in the case, if exclusively such types of services would be carried out with its associated enterprises in the tax year. The arm’s length price range for such types of transactions would be reduced from the current range of 3-10% to 3-7%.


The draft defines the concept of ’same kind of low added value intra-group services’ and the concept of ’intangible assets’. 


The draft will enter into force on the 30th day following the promulgation of the ???/2017 NGM Decree. The effect of Finance Minister’s Decree 22/2009 (X.16.) PM on the documentation obligation related to the determination of the arm’s length price would be ceased by 1 January 2018. The draft contains transitional provisions as well for the transfer pricing documentations related to the 2017 tax year, according to which the taxpayers could apply the new rules already for the preparation of these documentations, too.


Download: EN_TP_NGM_Rendelet_Melléklet.xlsx