Simpler But Harsher Transfer Pricing Requirements

From the start of 2012, transfer pricing documentation requirements have been simplified but, at the same time, the penalties for non-compliance have increased.

The simplified rules may also be used for the 2011 tax year (for which the documents must usually be prepared by May 2012).

The standard maximum penalty for not having TP documentation will remain HUF 2 million (approx. €6,400) per missing document. However, this can double for repeated violations and quadruple if the repeat violation relates to the same transaction.

Heavily simplified documents may now be prepared for low value adding intra-group services.

There is no longer any need to produce comparables to justify a cost plus mark-up of between 3% and 7% for a qualifying service, unless the taxpayer normally provides or receives the same services to or from unrelated parties at a different price.