Is it worth choosing the new transfer pricing regulation rules for 2025?

In connection with the new transfer pricing (TP) regulation that will become mandatory from 2026, one of the most important questions is whether it is worth applying the new rules already in the current filing period for the 2025 tax year—specifically, the exemption from preparing a local file for transactions below HUF 150 million. The legislator has provided taxpayers with the option to bring forward the application of the new regulatory framework in this respect.

 Although it may seem favorable at first glance, in reality this transfer pricing relief only increases the risk!

Although the application of the new transfer pricing rules may appear advantageous at first glance, practical experience suggests that the situation is not so clear-cut. Unfortunately, the new rules and simplifications do not apply uniformly: while they may be elected for the purposes of the local transfer pricing documentation (local file), they do not apply to transfer pricing reporting requirements or to group-level transfer pricing documentation.

2025 – A Transitional Year for Hybrid Transfer Pricing Compliance

For this reason, as a general rule, it is not worthwhile to opt for the new transfer pricing regulation for the 2025 tax year. To understand this conclusion, it is important to note that 2025 is not a year in which the new transfer pricing regulation applies in full. While taxpayers may elect to apply the new rules to local transfer pricing documentation, the transfer pricing reporting requirements (ATP forms) and the master file remain subject to the provisions of the previous regulation.

In practice, this means that taxpayers are required to comply with their transfer pricing obligations under two different sets of rules simultaneously: one governing the documentation and the other governing the reporting requirements. This duality, in itself, increases the risk of inconsistencies and explanatory challenges during a subsequent tax audit conducted by the Hungarian Tax Authority (NAV).

Benchmarking requirement in 2025: mandatory even without transfer pricing documentation

One of the most common misunderstandings regarding the new transfer pricing regulation is that if a transaction falls below the HUF 150 million threshold and is therefore not subject to local documentation requirements, no benchmarking is necessary either. However, this is not correct – such an exemption has never existed, meaning that benchmarking analysis is mandatory with respect to the past, present, and future alike.

Accordingly, benchmarking analysis must also be prepared in 2025 for every related-party transaction, regardless of whether local documentation is required for the given transaction. This is because compliance with the arm’s length principle must be ensured for all transactions, and transfer pricing reporting remains mandatory; furthermore, the completion of the ATP forms is not possible without supporting analysis. In other words, the absence of documentation does not result in a genuine administrative simplification, as the analytical work and benchmarking exercise must still be carried out in any case.

Transfer pricing reporting (ATP) and NAV risk: lack of documentation does not mean invisibility.

It is important to emphasize that in 2025, NAV’s risk assessment continues to rely primarily on transfer pricing reporting, i.e. ATP data. If a benchmarking analysis has been prepared for a transaction and the ATP forms are submitted, the transaction is fully visible to the tax authority, even if no local transfer pricing documentation has been prepared. In many cases, this creates a paradoxical situation: the taxpayer performs the analysis and reports the data, but no structured explanatory documentation is available, meaning that in an audit it is often more difficult to defend the position than if a coherent local file were available.

Segmentation in the new transfer pricing regulation: the biggest practical pitfall

One of the most significant—and most underestimated—changes in the new transfer pricing regulation is the tightening of segmentation requirements. The regulation makes it clear that the profitability of related-party transactions cannot be assessed at a company-wide, aggregated level; instead, each transaction must be presented separately.

Based on our practical experience, segmentation is the requirement that most clients find the most difficult to comply with. This is because accounting systems are typically not designed for transaction-based segmentation, the allocation of indirect costs is retrospective and often methodologically weak, and, furthermore, it is not always reproducible or supportable from a business perspective.

Why is segmentation particularly risky in 2025?

A key feature of the transitional year is that discrepancies can easily arise between the documentation and the calculation logic underlying the ATP data. It may occur that the taxpayer already applies the segmentation approach under the new regulation in the local transfer pricing documentation, while the ATP forms must still be completed in accordance with the previous rules. However, the tax authority (NAV) primarily relies on ATP data, meaning that differing segmentation logics may lead to increased explanatory requirements and a higher audit risk.

This is one of the strongest arguments that applying the new rules for 2025 increases risks.

When might it still be worthwhile to opt for the new transfer pricing regulation for 2025?

Despite the above risks, there are cases where early application of the new rules may be professionally justified. This may be the case, for example, where the taxpayer deliberately treats 2025 as a preparatory year and already uses it to redesign its segmentation, benchmarking processes, and internal data structure in preparation for the mandatory transition in 2026. It may also be a realistic option for simple, clearly separable transactions where segmentation is already stable and where ATP and documentation data can be easily aligned.

Overall, for 2025, opting for the new transfer pricing regulation can only be recommended in exceptional cases. Due to the continued benchmarking requirement, the unchanged ATP rules, and above all the practical difficulties of segmentation, maintaining the existing system is, for most taxpayers, a safer and more predictable solution, combined with a structured preparation for the mandatory transition in 2026.

What is transfer pricing and why is it a key issue in 2026?

Segmentation in Light of the New Transfer Pricing Decree

Related Parties and Transfer Pricing – When Is Documentation Required?

More than just transfer pricing records – LeitnerLeitner Magyarország