Belgium

  1. A. Transfer pricing documentation requirement
    1. 1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
    2. 2. What is the content of the documentation that must be prepared?
    3. 3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?
    4. 4. In the event that the documentation is not provided within the applicable timescale, or is incomplete, do documentation-related penalties apply in your jurisdiction? If so, please detail the penalties and the circumstances in which they do and do not apply.
    5. 5. Does the absence or incompleteness of documentation reverse the burden of proof as regards the arm’s length character of the transactions?
    6. 6. In the event that the tax authorities (i) impose documentation-related penalties and (ii) make a transfer pricing reassessment, does the imposition of documentation-related penalties prevent the taxpayer from initiating any mutual agreement procedure which may be contained in an applicable tax treaty (or, for EU countries, the procedure contained in the EU Arbitration Convention) with a view to eliminating any double taxation resulting from the transfer pricing reassessment?
    7. 7. Any other relevant aspect not addressed above?
  2. B. Country-by-Country reporting (“CbCR”)
  3. 1. Did your jurisdiction implement the obligation to file a CbCR? If not, is the introduction of the CbCR in your jurisdiction contemplated and, if so, when?
    1. 2. If the obligation to file a CbCR is in force, what is the tax year from which this obligation applies and what is the deadline for filing the CbCR?
    2. 3. Which taxpayers have to file a CbCR in your jurisdiction?
    3. 4. Is the content of the CbCR fully in line with the OECD model (final report on Action 13 of the BEPS project)? If not, what are the differences?
    4. 5. What is the penalty for failing to file the CbCR on time? Can local subsidiaries of a foreign group suffer the local penalty if the foreign group has not filed the CbCR?
    5. 6. Are there tax treaties in force in your jurisdiction allowing the communication of CbCR with other jurisdictions?
    6. 7. Any other relevant aspect not addressed above?
  4. C. As the case may be, other documentation/filing requirement in relation to transfer pricing?
    1. 1. In your jurisdiction, are there any other documentation/filing requirements in relation to transfer pricing?
    2. 2. If so, what is the content of such documentation/filing requirement? What language(s) are to be used by taxpayers?
    3. 3. What is the deadline for meeting this documentation/filing requirement?
    4. 4. Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?
    5. 5. What is the penalty for failing to meet this requirement on time?
    6. 6. Any other relevant aspect not addressed above?

A. Transfer pricing documentation requirement

1. In your jurisdiction, are taxpayers obliged to maintain transfer pricing documentation? Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

A legal obligation to have transfer pricing documentation has been introduced in Belgium by the Program Act of 1 July 2016. The obligation applies for financial years starting as of 1 January 2016.

The legal provisions implementing the obligation have been included in articles 321/1–321/7 of the Belgian Income Tax Code. The obligation applies to any Belgian entity that is or is required to be included within the consolidated accounts of a multinational group, including permanent establishments to the extent they are required to publish their own separate annual accounts, when such entity attains or exceeds, on the basis of its own annual accounts of the financial year preceding the most recently ended financial year, at least one of the following thresholds:

  • Total yearly operational and financial income of EUR 50m (excluding non-recurrent/exceptional income);
  • Balance sheet total of EUR 1bn;
  • Annual average of 100 full-time employees.

2. What is the content of the documentation that must be prepared?

a) Which transactions must be documented (all transactions with associated enterprises, or only those which exceed a particular threshold)?

All transactions with associated companies have to be documented and their price must be justified at all times. With regard to the “local file”, a threshold of EUR 1m is however applied. No specific information is required about cross border transactions which do not exceed the threshold.

b) What is the definition of “associated enterprises” for the purposes of this requirement (in particular, are transactions between a permanent establishment and its head office in the scope of the documentation requirement)?

In accordance with the Belgian company code, “associated companies” are:
A. any company that controls another company (based on share ownership, voting power, power to appoint the majority of the members of the board),
B. any company that is controlled by another,
C. companies that are part of a consortium,
D. other companies that are controlled by the companies mentioned above on (A), (B) and (C).

c) For EU countries, is the content of the documentation similar to that described in the EU Code of Conduct on transfer pricing documentation for associated enterprises (“EU TPD”)? If not, are taxpayers entitled to choose between the local requirements and the EU TPD?

Yes.

d) For all countries (and, in particular, OECD countries), is the content of the documentation similar to that described in the revisions to chapter V of the OECD transfer pricing guidelines (final report on Action 13 of the BEPS project)? If not, are taxpayers entitled to choose between the local requirements and the OECD approach?

The legal provisions are very similar. The three layers have been adopted as provided by Action 13 (Master file, local file and country-by-country report).

e) Do taxpayers which are not established in your jurisdiction need to undertake to provide any specific information upon request? Can your tax authorities require the taxpayer in your jurisdiction to provide information which is located in another state?

The Belgian tax authorities may request information only from Belgian taxpayers, including permanent establishments in Belgium of foreign entities. Such requested information could include information located in another State.

With regard to taxpayers that are not established in Belgium, the Belgian tax authorities could request assistance from the tax authorities of the foreign jurisdiction in obtaining information.

f) If comparable studies are to be provided, do the tax authorities generally accept regional benchmark studies (e.g. pan-European benchmark studies)?

In practice, regional benchmark studies and in particular pan-European benchmark studies are generally accepted by the Belgian tax authorities.

g) If comparable studies are to be provided in general, are safe harbours/specific circumstances exempting taxpayers from preparing benchmark studies (such as the EU Joint Transfer Pricing Forum guidelines on low value adding services 1 Report called “Guidelines on low value adding intra-group services” adopted by the European Union Joint Transfer Pricing Forum during the meeting of 4 February 2010. or revisions to chapter VII of the OECD transfer pricing guidelines about low value adding intra-group services) in your jurisdiction or are there situations in which tax authorities do not request benchmark studies? If so, in which circumstances taxpayers are exempted from benchmark studies?

The benchmark study is in principle part of the “detailed information form” to be filed together with the local file, but only to the extent at least one of the entity’s divisions/business units exceeds a threshold of EUR 1m for cross border transactions. Therefore, if the threshold of EUR 1m for intragroup transactions is not exceeded on a yearly basis, a benchmark study will generally not be required.

h) What language(s) are to be used by taxpayers in submitting the transfer pricing documentation?

The languages that are used in Belgium are French, Dutch or German depending on the location of the registered seat/establishment of the company. The Belgian tax authorities however also accept transfer pricing documentation drafted in English.

3. What is the deadline or timescale for providing transfer pricing documentation to the tax authorities (is it to be provided for example upon filing of the tax returns, at the beginning of a tax audit, or on the specific request of the tax authorities)?

Both the master file as the country-by-country report have to be filed within 12 months as of closing of the financial year.

The local file needs to be filed together with the yearly income tax return of the Belgian entity, which is general is at the end of the third quarter.

Moreover, a qualifying Belgian entity will be required to notify to the Belgian tax authorities, at the end of the financial year at the latest, whether it is the ultimate parent company of the multinational group or not.

Specific administrative penalties for non-compliance ranging between EUR 1,250 and EUR 25,000 may be applied by the Belgian tax authorities; when the master file, local file or country-by-country report are not filed, are lately filed or are incomplete, or when the entity does not duly and timely notify to the tax authorities its ultimate parent company status. Moreover, if the requested information is not provided, the tax authorities could adjust the taxpayer’s taxable basis on the grounds that the transaction does not comply with the arm’s length principle. In addition, tax on the non-reported portion of income could be increased with penalties of 10% to 200%, depending on the nature of the taxpayer’s infringement.

5. Does the absence or incompleteness of documentation reverse the burden of proof as regards the arm’s length character of the transactions?

If the required information is not provided, the tax authorities could adjust the taxpayer’s taxable basis; the taxpayer will then have to demonstrate based on supporting evidence/documentation that the transaction complies with the “arm’s length principle” and that the tax authorities may not adjust its taxable basis. This does indeed imply a reversal of the burden of proof.

The reassessment of the taxable basis or the application of penalties will not prevent the taxpayer from engaging a mutual agreement procedure provided for by a double tax treaty or by any international treaty, to the extent that they do not result from a tax law infringement performed with fraudulent intent.

7. Any other relevant aspect not addressed above?

Not applicable.

B. Country-by-Country reporting (“CbCR”)

1. Did your jurisdiction implement the obligation to file a CbCR? If not, is the introduction of the CbCR in your jurisdiction contemplated and, if so, when?

Yes.

2. If the obligation to file a CbCR is in force, what is the tax year from which this obligation applies and what is the deadline for filing the CbCR?

The obligation applies for financial years starting as of 1 January 2016. The first CbCR is therefore to be filed on 31 December 2017 at the latest.

3. Which taxpayers have to file a CbCR in your jurisdiction?

Belgian ultimate parent companies of a multinational group with consolidated yearly gross income of at least EUR 750m are required to submit a CbCR (in addition to the master file and local file).

4. Is the content of the CbCR fully in line with the OECD model (final report on Action 13 of the BEPS project)? If not, what are the differences?

Yes.

5. What is the penalty for failing to file the CbCR on time? Can local subsidiaries of a foreign group suffer the local penalty if the foreign group has not filed the CbCR?

When the CbCR is not filed, is lately filed or is incomplete, penalties ranging between EUR 1,250 and 25,000 may be imposed. The penalty can be imposed on permanent establishments of foreign entities falling within the scope of the TP documentation obligation.

6. Are there tax treaties in force in your jurisdiction allowing the communication of CbCR with other jurisdictions?

Not applicable.

7. Any other relevant aspect not addressed above?

Not applicable.

C. As the case may be, other documentation/filing requirement in relation to transfer pricing?

1. In your jurisdiction, are there any other documentation/filing requirements in relation to transfer pricing?

In addition to the local file, and only to the extent at least one of the entity’s divisions/business units exceeds a threshold of EUR 1m for cross border transactions, a “detailed information form” is to be filed. For each entity’s divisions exceeding the 1 million threshold of cross border transactions, such detailed information form is to be filed.

2. If so, what is the content of such documentation/filing requirement? What language(s) are to be used by taxpayers?

A transfer pricing analysis of transactions occurred between the Belgian entity and the foreign entities of the multinational group, in particular the relevant financial information of these transactions, a benchmark study and the selection of the most appropriate transfer pricing method.

The languages that are used in Belgium are French, Dutch or German depending on the location of the registered seat/establishment of the entity. The Belgian tax authorities however also accept transfer pricing documentation drafted in English.

3. What is the deadline for meeting this documentation/filing requirement?

The local file including the detailed information form is to be filed together with the yearly income tax return (in general at the end of the third quarter).

4. Does this obligation apply to all taxpayers, or only to certain categories (e.g. taxpayers with turnover or assets exceeding a particular threshold)?

The obligation applies for cross border transactions with other group entities during the most recently closed financial year exceeding EUR 1m.

5. What is the penalty for failing to meet this requirement on time?

When the local file, including the detailed information form, is not filed, is lately filed or is incomplete, penalties ranging between EUR 1,250 and EUR 25,000 may be imposed.

6. Any other relevant aspect not addressed above?

Not applicable.