The methodology used for transfer pricing database searches is not fundamentally new. From 2026, however, substantially more detailed rules set out in a decree govern how searches using company databases must be conducted and documented, highlights Henriett Kovács, Senior Transfer Pricing Consultant at Niveus. A widely used professional practice has developed in the advisory market over recent years, and the new rules now enshrine several elements of that practice in legislation.

The change stems from NGM Decree No. 45/2025 (XII. 23.) on transfer pricing documentation and transfer pricing data reporting. As a general rule, the new decree applies to tax years beginning in 2026, although taxpayers may elect to apply it to certain local files for the tax year beginning in 2025. Ministry guidance published on 9 July 2026 also assists with interpreting the detailed rules.

Established professional practice is now partly a statutory requirement

The use of company databases and the screening of comparable companies were, of course, already familiar features of transfer pricing. Advisers typically conducted database searches using similar criteria, including business activity, geographic location, independence and financial data.

The main development is that the NGM decree now contains a separate chapter governing the search process in databases containing company-level information. Among other matters, it specifies requirements for the final set of comparables, the period covered by the financial data used, the treatment of loss-making companies, activity and geographic screening, and the review of company websites.

The change therefore does not introduce an entirely new search methodology. Rather, some methodological expectations previously applied as part of professional or tax authority practice have now become explicit statutory requirements.

Geographic screening follows a more prescribed sequence

One of the most notable changes is the prescribed sequence for geographic searches.

Where the tested party is a Hungarian resident, the decree requires Hungary to be considered first. If this does not produce a set containing a sufficient number of comparables, the search may first be extended to the other Visegrád Four countries: Czechia, Poland and Slovakia.

If this remains insufficient, the next step is to include the additional Central and Eastern European countries specified in the decree: Bulgaria, Estonia, Croatia, Latvia, Lithuania, Romania and Slovenia. This may be followed by an extension to the remaining European Union Member States and, finally, where justified, to another appropriate geographic area.

The ministry guidance adds a practical qualification: the database search may technically begin with a broader geographic scope. However, the manual review should start with the narrower geographic area, with the set expanded only if that area does not yield a sufficient number of comparable companies.

TEÁOR codes take priority, with keyword searches used only where justified

The expectations for activity screening have also become more specific.

Under the decree, screening should primarily use companies’ primary activity codes, without keyword searches. The ministry guidance adds that Hungary’s TEÁOR economic activity classification codes should preferably be used and that, where an activity is covered by several codes, all relevant codes must be considered.

Keyword searches are not prohibited, however. They may be used where justified and must be combined with the activity code search using an alternative, or “OR”, logical relationship.

There is no significant change regarding checks on the availability of appropriate financial data or the independence of companies. These largely continue established search practices, with the important difference that some expectations are now expressly set out in the decree.

Specific rules also apply to financial data and loss-making companies

The decree also defines in greater detail the period covered by the financial data that may be considered in the search.

As a general rule, financial data for the three years preceding the tax year under review must be taken into account. In practice, this further reinforces the importance of multi-year analyses and reduces the risk that exceptional performance in a single year will distort the comparison.

The treatment of loss-making companies is also becoming more closely regulated. The search must assess whether losses incurred by companies selected as comparables make them unsuitable for inclusion.

This matters because a loss does not, in itself, automatically mean that a company is not comparable. Persistent losses or losses that cannot be justified on economic grounds may, however, warrant excluding the company.

Database searches must be updated regularly

The new rules also address how frequently searches must be updated.

If there has been no material change in the relevant business circumstances, the full database search may be repeated at three-year intervals. The financial data of the selected comparable companies must nevertheless be updated annually.

Companies therefore do not necessarily need to run an entirely new search every year. However, they must continue to assess whether the methodology of the previous search and the selected set of comparable companies remain appropriate.

Documenting the search becomes even more important

The traceability of database searches is becoming a key issue.

The decree requires the search for comparable data to be documented in a way that allows it to be reproduced. If the database used does not provide this functionality itself, the search steps must be recorded in sufficient detail.

According to the ministry guidance, the database search documentation must include screenshots showing the logical conditions applied, together with a detailed description and justification of the screening steps.

The requirement for reproducibility is not entirely new: documenting searches was already expected under the previous rules and tax authority practice. However, the new decree sets out many elements of the search methodology in considerably greater detail, making the quality and consistency of documentation even more important.

Website reviews should also be treated as evidence

The review of company websites receives particular attention.

Under the decree, the companies included in the final set must also be comparable on the basis of their websites. The ministry guidance further highlights the need to verify that the taxpayer is reviewing the website of the correct company. Relevant web pages should preferably be saved or documented using screenshots.

The practical importance is clear. A tax audit may take place years after a database search was conducted, while the content of a company’s website may have changed substantially in the meantime.

In light of the decree and the guidance, it may therefore be appropriate in practice to retain not only the outcome of the website review, but also the date of the review and the content examined. This makes it possible to substantiate later what activities the company carried out when the search was prepared and why it was considered comparable.

Both the search results and the process leading to them must be substantiated

The new rules therefore do not represent an entirely new requirement. Instead, they formalise, elaborate on and partly elevate into statutory requirements certain elements of established professional practice.

Nevertheless, the practical significance of the change should not be underestimated.

Going forward, it will matter not only which companies were included in the final set and what arm’s length range their results produced. It will be equally important for the taxpayer to demonstrate precisely the search strategy, geographic and activity screening, financial data and documentation used to arrive at the search results.

A search can therefore increasingly be seen as more than simply a result generated from a database: the methodology applied and its traceable documentation are themselves becoming an essential part of transfer pricing documentation.