In December 2025, the Hungarian Ministry of National Economy formally published Decree No. 45/2025 (XII. 23.) NGM on transfer pricing documentation and reporting, which substantially redefines the local regulatory framework and will come into effect for fiscal years beginning in 2026. The decree replaces the old regulation (Decree 32/2017 (X. 18.) NGM) and transfers to the legal text a large part of the practices, definitions, and procedures that the Hungarian tax authorities had been requiring de facto in the recent past.
The significance of this regulatory change is considerable. The compliance framework is no longer a combination of administrative interpretations and technical guidelines but has become a detailed legal structure that imposes specific requirements on documentation, economic analysis, profit tests, comparability criteria, and the presentation of segmented financial data. This development has direct implications for multinational groups with operations in Hungary, particularly with regard to the preparation and defense of their transfer pricing policies.
Reconfiguration of documentation thresholds and obligations
One of the most significant changes introduced by the decree is the alteration of the thresholds that determine documentation obligations. Under the new regime:
- The threshold for preparing a Local File is raised from HUF 100 million to HUF 150 million (transactions with related parties at arm’s length net value) in a given fiscal year.
- The obligation to prepare a Master File no longer depends on the existence of a Local File for any transaction; it is now only necessary if the total value of the taxpayer’s transactions with related parties exceeds HUF 500 million in the fiscal year.
- Several previous exemptions (e.g., for simple cost reimbursement charges) are eliminated, and certain transactions now subject to mandatory documentation are included even if no invoice has been issued.
The update of these thresholds reflects two regulatory objectives: to reduce the administrative burden for low-volume and low-concentration transactions, while strengthening scrutiny of materially significant transactions. However, raising the threshold does not imply the absence of tax risk: the transfer of goods and services at prices inconsistent with the arm’s length principle remains subject to adjustments and potential penalties, regardless of the obligation to prepare a Local File.
Greater analytical rigor: segmentation and economic testing
The new decree not only redefines the thresholds; it also introduces significantly more demanding analytical and evidentiary requirements. These include:
1. Segmentation of financial statements
The rule now requires that, when a profitability-based method (e.g., TNMM) is used, the financial data used in the analysis must be segmented by type of related transaction. This requires taxpayers to prepare income statements segmented by activity, allowing revenues, costs, and results to be traced directly to the specific set of transactions under review. It will not be acceptable to use aggregated financial statements from the company’s balance sheet when the company engages in multiple distinct activities.
This level of depth in segmentation seeks to ensure that comparability analyses reflect the actual economic behavior of the parties under review and reduce reliance on aggregated accounting data that may mask significant functional differences.
2. Benefit test for intragroup services
One of the most significant innovations of the decree is the formal introduction of a mandatory benefit test: services between related parties must document that they generate a real economic benefit for the recipient and that this benefit is equivalent to what an independent third party would have accepted under comparable conditions. This test applies especially to support, administrative, financial, or management services provided by the parent company or centralized support units.
Unlike the previous regime, where it was sufficient to demonstrate a market margin, the obligation now requires a detailed economic and operational justification that refutes the argument of services merely attributable to internal agreements without substance.
Evolution of rules on low value-added services
The decree also reformulates the conditions applicable to so-called “low value-added services” (LVAS). The previous regulations provided for more flexible and segmented criteria for access to simplified documentation without the need for comparable analysis; however, the new legislative text “specifies” these criteria in objective terms:
- For services provided by a related entity, the actual margin must be at least 5% of total costs in order for simplified treatment to be allowed.
- For services received, the margin must not exceed 5%.
- If the proportion differs from these ranges, the taxpayer is required to prepare complete documentation with comparable analysis.
This unification of the margin criterion and its application based on the actual economic result achieved, and not only on the contractual price, reinforces the results-oriented approach. In other words, the mere existence of low value-added services is no longer sufficient; their economic impact must be quantifiable and consistent with market conditions in order to qualify as simplifiable.
Benchmarking and specific comparability criteria
Another area where the decree provides greater clarity and requirements is the process of selecting comparables and conducting benchmarking studies:
- Search criteria are established by geographical hierarchy: Hungary first, followed by the Visegrád Group countries (Poland, Czech Republic, Slovakia), then Bulgaria, the Baltic countries, Croatia, Romania, and Slovenia, and even the European Union as a whole if there is insufficient sample size.
- The studies must include individually identifiable comparable companies that meet functional and performance criteria, including the exclusion of losses or atypical periods without justification.
- The decree formalizes that profitability results must be fully traceable to local financial statements and not just derived from aggregate metrics not directly related to the transactions under review.
The codification of these comparability criteria implies that centralized or generic benchmarking practices may be insufficient in Hungary unless they are explicitly adapted to the search and segmentation requirements prescribed by the decree. This increases the complexity of properly complying with comparable studies and raises the risk of adjustments in tax audits.
Transition of internal policies and early adoption options
A relevant feature of the decree is that it allows, at the taxpayer’s discretion, certain provisions of the new regime to be applied in advance for tax years beginning in 2025. This early adoption is limited to certain cases of local documentation (Local File) and does not apply to Master File obligations, but it offers a strategic alternative depending on the taxpayer’s profile and transaction volume:
- Companies that anticipate a reduction in documentation requirements (e.g., Master File or Local File exemptions) could benefit from applying the new decree from 2025.
- Conversely, groups that have not yet structured robust accounting and reporting systems to comply with segmentation, benefit testing, local benchmarking, and detailed DEMPE may choose to apply the old rules in 2025 and use 2026 as the implementation period.
The strategic decision to adopt early should carefully consider internal compliance capacity and data system readiness, as the new regime requires much higher levels of operational detail and evidence.
Implications for compliance practice and tax audits
The net effect of the decree is a significant increase in the formality and rigor of transfer pricing compliance in Hungary. Some of the most relevant implications include:
- Greater likelihood that the tax authority will initiate in-depth transfer pricing audits based on segmented criteria and economic substance.
- Reduced flexibility to justify intra-group pricing policies without direct comparability documentation and robust economic evidence.
- Need to review internal contracts, detailed functional profiles, and cost and revenue allocation methods to ensure they meet the criteria for demonstrating real economic benefit.
- Potential penalties for non-compliance with the new documentation requirements and for failure to provide evidence of benefit or financial segmentation.
Effects of the new decree on the tax management of multinational groups
Overall, Decree No. 45/2025 (XII. 23.) NGM represents a structural evolution of the transfer pricing regime in Hungary, bringing many practices that were previously mere administrative expectations into the legal sphere and raising the standard of local compliance to align it with international best practices, including the OECD Transfer Pricing Guidelines and practices derived from intensified audits in recent years.
For multinational groups with operations in Hungary, this implies not only adapting traditional documentation policies, but also developing internal systems capable of generating detailed financial segmentation, economic benefit evidence, and solidly supported local benchmarking. The transition and preparation for the new requirements, which will mainly apply in 2026, should be part of the medium-term strategic tax planning of any corporate structure with a tax presence in that country.
Technical support in light of the new requirements in Hungary
The entry into force of the new transfer pricing decree in Hungary requires a comprehensive review of intra-group policies, documentation models, and financial information systems used to support local compliance. The correct application of criteria such as financial segmentation, benefit testing, and benchmarking according to specific geographic hierarchies requires a coordinated technical approach consistent with international standards.
In this context, TPC Group, as a company specializing in transfer pricing, advises multinational groups on impact assessment, internal policy adaptation, and the preparation of robust documentation, aligned with both Hungarian regulations and OECD guidelines, contributing to preventive and technically defensible tax management in the event of audits.
Source: https://magyarkozlony.hu/dokumentumok/07b1e2fdffc8e80dff43e39b1b01b4a955ad4441/megtekintes