These companies may be partially or fully exempt from transfer pricing documentation!

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These companies may be partially or fully exempt from transfer pricing documentation!

There have been significant changes in transfer pricing in the past year. Previously, it was still mandatory to keep records above certain thresholds, but from 2022, companies subject to the obligation will be required to include the most important information from the documentation prepared in the corporate tax return (ATP-01 and ATP-KV). If a company fails to do so and is found to be non-compliant during an official audit, it could face fines of up to several million euros per transaction. It is also important to know who is exempt and which transactions are partially exempt from transfer pricing documentation," says Csaba Szabó, Professional Director of ICT Europa Finance Zrt.

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The following companies and transactions are fully exempt from the reporting and record-keeping obligations: companies that do not reach the medium sized enterprise SME classification on the last day of the tax year or reach it but have no affiliated company. In addition, transactions between related enterprises whose total value at market price does not exceed HUF 100 million net, certain transactions (except insider dealing) and transactions at official prices. These transactions are not subject to any transfer pricing reporting obligations, nor do they have to be recorded by the enterprises.

For partially exempt transactions, full reporting is not required, but certain information must be provided: the name of the transaction; the TEÁOR number of the transaction; the name and tax number of the related enterprises involved in the transaction; the net consideration of the transaction; the amount of the Tao basis adjustment for the tax years related to the transaction, broken down by related enterprises. This includes, for example, contracts entered into with a private individual other than as a sole proprietor, the consideration for services or supplies of goods provided by a non-related company and charged to related companies for an unchanged amount. In addition, the transfer and receipt of funds free of charge is also partially exempted from the reporting obligation. It should be stressed that this is only a partial exemption, so it is necessary to provide partial information - warns Csaba Szabó, Technical Director of ICT Europa Finance Zrt.

It is important to note that the corporate tax base adjustment obligation exists or may exist for each transaction with an associated company, regardless of the reporting obligation.

It is necessary to pay attention to the legislation and be diligent in reporting and record keeping to ensure that the company is compliant and avoids penalties. Therefore, it is worthwhile to have a transfer pricing expert examine the company's transactions and relationships, as a clear position is needed to determine whether the company is obliged and, if so, whether it may have partially exempt reporting obligations," said the professional director of ICT Europa Zrt.

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