Transfer Pricing Services

Transfer pricing is probably the less exact area of taxation, the underlying legislation is composed in such an extremely general way that it enables a quite subjective judgement of the Tax Authority. Accordingly – due to lack of detailed regulation –tax audit and practical experience become more valuable. The high degree of subjectivity may trigger significant risks if the intercompany prices are not substantiated sufficiently. Consequently, the tax liability might significantly change, the handling of what requires a lot of time and effort, moreover, in worst case it might entail a significant penalty and an increased level of tax liability.

The Transfer Pricing Services Group of KPMG in Hungary primarily provides assistance in the identifying, prioritising and managing of transfer pricing risks. Our group of 20 stuff provides broad range of services to its customers covering numerous industries.

The preparation of statutory transfer pricing documentation causes extra efforts for the companies, on the other hand, offers an opportunity to support the arm's length nature of the applied transfer prices with an appropriate presentation of facts and circumstances affecting the price setting mechanism.

Within the framework of our services, based on our wide scope of tax audit experience, we undertake the review of the existing or the preparation of transfer pricing documentation in line with the Hungarian transfer pricing legislation and the OECD transfer pricing guidelines as well.

Upon request we provide advisory services in transfer pricing related tax investigations, assisting in the preparation of official comments, and appeals filing with the Tax Authority, composing various requests and other documentations.

Based on our experience it is even more typical that the tax audit procedures are raised at court litigation level where numerous success have been recently achieved by our clients against the Tax Authority.

By involving the legal services within KPMG in Hungary, we can provide assistance in the whole court litigation procedure, including the legal representation before the court.

Based on the available professional databases and our database search strategies built in line with the experiences gained from Tax Authority cases, we would assist in the determination of the arm’s length price range for one country or region, even with retroactive nature as well.

Regarding the financial transactions (loans, hedge transactions, cash-pools, other treasury transactions), in order to determine the arm's length price range we are preparing benchmarking analyses with the application of an internationally acknowledged financial database for the examination of the arm's length nature of transfer prices applied.

Within the framework of the service, upon request we are examining, commenting and reviewing the group’s currently applied transfer prices and price setting methods.

Furthermore, we identify those areas, which might trigger tax risk and make recommendation to eliminate / mitigate them. In the context of this activity, both the characteristic of the industry and the opportunities of the company are taken into consideration.

APA request are even more often filed with the Tax Authority, which is particularly recommended in the case of new transactions with high volume.

The procedure is available in unilateral, bilateral or multilateral format. Our services include the assistance during the whole APA procedure beginning with the preliminary meetings with the Tax Authority, the preparation and submission of the APA request, as well as ongoing advisory services within the decision-making period.

As a part of our service we could also arrange an anonym (and non-binding) meeting with the representatives of the Tax Authority, in order discuss about the potential risks might arise and the informal opinion of Tax Authority on the acceptability of the proposed approach.

Preparation of strategic documents and transfer pricing related guidelines (transfer pricing policy) for the group.

Upon request we undertake the composition transfer pricing policy of the group and the preparation of related strategic documentations in line with the core principles and goals of the group.

Within the framework of this activity we undertake the review and preparation of the company’s international central transfer pricing documentation (‘Master File’) in accordance with the actual international guidelines and requirements (OECD guidelines, EU TPD, BEPS, EU regulations) even for more Hungarian or foreign subsidiaries jointly.

In addition, upon request we assist in the communication, coordination and perform audits regarding the international transfer pricing materials with our KPMG foreign partner offices in order to ensure compliance of the group level documentations with Hungarian transfer pricing regulations.

We are providing support in respect of complex issues by consulting, preparing and filing non-binding guideline request which addressed to the Ministry of National Economic or to the Tax Authority.

Based on our experiences gained during Tax Authority investigation regarding inter-group services (typically management services, central supporting services) the preparation of the so-called „benefit test” document might be necessary, which justifies the service provision and therefore the deductibility of expenses incurred. In addition, we inform our Clients about the transfer pricing related legislative changes which are affecting the activity of the company, including the information regarding the actual changes of the international rules of transfer pricing with particular attention to the new OECD Action Plan (BEPS) and to the new EU ATAD. 

Furthermore, we undertake the organization of trainings, courses and workshops presenting the Hungarian transfer pricing regulations and our experience regarding transfer pricing examinations.