Numerous articles have heralded and described the new transfer pricing regulation that will come into force in 2026. It is not our intention to join this chorus, but rather to emphasize the importance of documenting all related-party transactions for the 2025 tax year and complying with data reporting requirements with particular care. (The two obligations may be sharply separated for the year 2025, while in the longer term the relationship between the two will strengthen as more elements of the records will have to refer more closely to the manner of data reporting.)

The basic situation is that even if we decide to apply the new regulation in record keeping, data reporting in May 2026 must be carried out according to the old rules. This means that all related transaction types above HUF 100 million must still be reported, even if we do not prepare documentation for them (below HUF 150 million) under the new rules. In this case, we also have to decide what quality of data to report in the transitional year (e.g., whether to update the benchmark or work out the comparative prices even without a record-keeping obligation) or, using the last data available to us, not to make any further efforts in this transitional year, accepting the possible negative consequences of the convenient solution. 

The situation is further complicated by the legislator’s intention to allow a choice between the old and new rules for each type of transaction, i.e. it will be possible to apply the new rules to a manufacturer’s activities but still apply the old rules to the same taxpayer’s distribution activities. 

Obviously, if the total value of related transactions in each type of transaction exceeded HUF 150 million in 2025, the early application of the new system may be considered, but let’s not forget that there is no such thing as a free lunch. Any simplifications are justified (e.g., no market overview required below HUF 1 billion, master file up to HUF 500 million), but a benefit test must also be performed on incoming services above HUF 150 million if we choose to apply the new rule to them as well. In this case, we also impose stricter rules on consolidation (e.g., assembly cannot necessarily be added to the manufacturing transaction). 

At first glance, it seems worthwhile to bring forward the simplification for low value-added services, as who would not want to save on benchmarking costs to support the 5% profit margin commonly used in international relations? However, determining whether we meet the conditions for application is by no means simple and requires not only self-assessment but also the involvement of other group members, as we can only use simplification if we know that none of our group members perform the same activity for independent parties.

Expectations are likely to increase in terms of substantiating the normal market price of the services used. If the tested party is a foreign service provider, we will be expected to provide a segmented breakdown of its actual profitability and costs during the tax audit. If we are unable to provide this for the 2025 financial year, we will use 2026 to prepare for this, as we will already have to document 2026 in this way. 

The above examples are just illustrations of what to consider and how to do so when compiling the 2025 TP records and reporting data. This is particularly true because we need to make careful decisions, and it is not even certain that we have all the relevant information. The new decree will be accompanied by a more detailed ministerial information document, which will hopefully provide further guidance for informed decision-making. The amount of risk a taxpayer is willing to take and their preferences during the transitional period in 2025 may also depend on their habits.