Transfer Pricing Audits in 2025: Increased Scrutiny, New Specialized NAV Units, and Higher Penalty Risks

April 1, 2025 | Author: Szilvia Sarkadi-Nagy

As of 2025, the Hungarian Tax Authority (NAV) has established specialized transfer pricing departments, signaling a clear intention to intensify the oversight of intercompany transactions.

Why does this matter?

Transfer pricing regulations aim to ensure that prices between related parties reflect market conditions. If not properly documented, NAV may adjust the tax base, potentially leading to tax shortfalls, penalties, and late payment interest.

Who is required to prepare transfer pricing documentation?

All companies qualifying at least as medium-sized enterprises, with annual intercompany transactions exceeding HUF 100 million, are required to prepare transfer pricing documentation. This documentation must justify that the applied prices are in line with the arm’s length principle. The deadline is May 31 2025, aligning with the corporate income tax return for calendar-year entities.

What are the risks of non-compliance?

  • Up to HUF 5 million per transaction for missing or incorrect documentation
  • Up to HUF 10 million in case of repeated omissions
  • Tax base adjustments and related penalties (50% tax penalty + late interest) for incorrect pricing

Mandatory data reporting in the corporate tax return

Since 2022, taxpayers are required to provide detailed information on their transfer pricing in their corporate income tax return. While this may seem like an administrative burden, it’s much more than that:

  • Inaccurate data can trigger a fine of up to HUF 1 million
  • NAV uses the data for risk analysis to identify targets for audit
  • NAV gets a clear picture of related-party transactions even before launching an audit
  • Compliance reviews dedicated to transfer pricing now have an extended timeframe of 60 days
  • Focus areas include:
    • Loss-making distributors
    • Food industry companies
    • Intangible assets and financial transactions

In 2024 alone, NAV reportedly carried out over HUF 100 billion worth of tax base corrections, identified HUF 8 billion in net tax differences, and imposed nearly HUF 100 million in penalties – a significant increase compared to 2023.

📌 Transfer pricing is no longer just a compliance formality – it’s a high-priority audit area. Having clear, well-prepared documentation and robust benchmarking is key to avoiding penalties and ensuring peace of mind.

💬 Need assistance with transfer pricing documentation or benchmarking studies? Our team is here to help.