From 2026, Decree No. 45/2025 (XII. 23.) of the Minister for National Economy introduces significant changes to several detailed rules governing transfer pricing documentation and the associated reporting requirements. One change of particular practical importance is the more precise definition of how profit level indicators must be calculated. While this may initially appear to be a technical matter, it can directly affect the profitability reported in a company’s transfer pricing analysis and, consequently, its tax liability, highlights Gergő Peperő, Senior Transfer Pricing Expert at Niveus.

A closer link between the method and the profit level indicator

The guidance issued by the Ministry of Finance establishes a clear link between the transfer pricing method applied and the corresponding profit level indicator. According to the guidance, the gross profit margin should be used for the resale price method, and the gross mark-up for the cost plus method, while taxpayers applying the transactional net margin method have several net profit level indicators available to them.

For the latter method, the legislation allows taxpayers to use an indicator calculated differently from those defined in the Decree where there are sound technical reasons for doing so. However, taxpayers must justify any departure from the standard indicators and select “other indicator” as the indicator tested in their transfer pricing reporting.

Low value-adding services are an exception to these rules: the indicator prescribed by the Decree must always be used for these services.

Greater emphasis on the appropriate accounting classification of costs

One important point highlighted in the Ministry of Finance’s guidance is that the same economic performance may produce different profitability results depending on how certain costs are classified for accounting purposes. This presents a particular risk when using gross profit level indicators and the Berry ratio, as differences in the classification of direct and indirect costs can, in themselves, undermine comparability between two businesses.

Against this background, the Ministry of Finance notes that using these indicators may entail a higher compliance risk. Accordingly, it gives preference to net profit level indicators for activities such as contract manufacturing, routine service provision and limited-risk distribution. For these routine activities, the new Decree accepts the use of the transactional net margin method (TNMM), together with a net cost plus mark-up or net profit margin, and the selection of the routine entity as the tested party, without requiring a separate justification.

Company-wide results may only be examined in justified cases

In line with the Decree, the Ministry of Finance’s guidance confirms that profit level indicators must be calculated for the relevant activity or segment. Where an overhead cost relates to more than one activity, it must be allocated between those activities on a reasonable and consistent basis. Company-wide results may only be used in the calculations if the tested party actually performs a single activity.

This may require more extensive preparation for transfer pricing analyses. It may therefore be advisable to ensure that the accounting and controlling systems already distinguish between the revenues, costs and allocation keys associated with individual controlled transactions.

The value of the tested indicator must be reported correctly

The Ministry of Finance’s guidance confirms several established practices. For example, indicators must be calculated to two decimal places, and where a transfer pricing adjustment has been made in relation to a transaction, profitability must be calculated after taking that adjustment into account.

The guidance also clarifies that where a taxpayer tests separate profit level indicators for individual products within the same product group, a separate ATP schedule must be submitted with the tax return for each indicator. Consequently, a single local file may be associated with several ATP schedules.

What does this mean for businesses?

The new rules do more than rename previously used indicators: they also define the conditions for their use more precisely. The calculation of profitability is more closely linked to the characterisation of the transaction, the transfer pricing method applied, the accounting classification and the transaction-level financial data.

Before preparing their transfer pricing documentation, businesses should therefore review whether their calculation methods comply with the new definitions, whether the indicators in the benchmarking sample have been calculated consistently, and whether appropriate segmented financial data are available and can be reconciled to the financial statements.