Hungary published Law XXIV of 2022 in the Official Gazette on 27 July 2022, which contains the measures for the 2023 Budget. Some of the main corporate tax-related measures of the budget concern transfer pricing, including:

• A new legal definition for the normal market (arm's length) range derived from the use of transfer pricing methods and comparable transactions or financial data of comparable independent parties, which is in line with OECD standards and already applied in practice;
• A new obligation for taxpayers to submit transfer pricing information with the corporate tax return, with the required information to be set through the transfer pricing regulations;
• New rules on the required use of interquartile range when transfer pricing methods are applied using data on a comparable product, service, or business stored in a public or taxpayer-controlled database, or available from another source that is publicly available or verifiable by the tax authority;
• New rules on applying the normal market range, including:
  • if the consideration (price) used is within the normal market range, the consideration is considered to be the normal market price and no transfer pricing adjustment is needed;
  • if the consideration (price) used is outside the normal market range, the median should (as a general rule only) be taken into account as the normal market price, and the transfer pricing adjustment should be made to this point; and
  • as an exception to the above point, if the taxpayer proves that a value other than the median within the range best corresponds to the transaction under consideration, then it should be adjusted to that value instead of the median;
• An increase in the penalties for missing, incomplete, or faulty documentation from up to HUF 2 million to up to HUF 5 million, with an increase in the higher penalty for repeat offenses from up to HUF 4 million to up to HUF 10 million.

Although the legislation is for the 2023 Budget, the transfer pricing changes generally apply for the first time in determining the tax liability for the tax year beginning in 2022. The obligation to submit transfer pricing information with the corporate tax return applies for the first time in a return submitted after 31 December 2022.

One other important change concerns the local innovation contribution (tax). Previously limited to resident companies, the scope of the contribution is extended to branches (permanent establishments) in Hungary of foreign companies. The change is effective 31 days after the law's publication, with branches of foreign companies required to pay a contribution advance for the 2022 tax year and the first two quarters of the 2023 tax year, and initial payments due by 20 October 2022.