Hungary’s Finance Ministry has decided to simplify procedures for European Union (EU) companies with a business presence in several member states by adopting uniform European documentation procedures for transfer pricing, becoming effective on January 1, 2010.
Under the new rules, EU-based firms will be permitted to provide one central document (or ‘masterfile’) of the group's activities for the whole EU area to the tax administrations in question, including in Hungary. The central document will comprise: a standardized description of the transfer pricing policies affecting the entire group, EU-wide, and a country-specific file, delineating specific contracts between the related parties.
Companies will be permitted to submit the documentation in a language other than Hungarian, but a Hungarian translation may be requested when the data is audited.
The requirement to use a public database to substantiate the validity of internal pricing policies can be dispensed with, if verifiable confidential corporate databases are used.
Simplified reporting will be an option for open-ended supply contracts as well as contracts with a specified end date, provided the value of supplies is less than HUF50m (EUR187,000) in any fiscal year. Documentation will not need to be updated annually, if the facts and circumstances remain unchanged.
Small and, in many cases, medium-sized enterprises will remain exempt from documentation requirements on transfer pricing.
Earlier this year, fees payable for an Advance Payment Agreement (APA) request were decreased and now range from HUF7m up to a maximum of HUF10m for a multilateral APA.
This comprehensive report in our Intelligence Report series examines the global and national landscapes in which companies can use transfer pricing to improve their after-tax returns, including summaries of recent developments in design of the corporate supply train, the usefulness of 'offshore' in international corporate tax planning, and a section covering the spread of DTAAs and CFC laws. It is available in the Lowtax Library at http://www.lowtaxlibrary.com/asp/subs_reports.asp and a description of the report can be seen at http://www.lowtaxlibrary.com/asp/description_report16.asp
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