Transfer Pricing
Country Summary

This document summarizes the transfer pricing requirements and regulations in Belgium. Belgium, as an EU member and part of the OECD, implemented formal transfer pricing documentation requirements in 2016, including master files, local files, country-by-country reporting, and notifications for qualifying multinational groups. The arm’s length principle is codified in Belgian law, with no formal disclosure requirements. Belgium defines related parties based on participation in management, control, or share capital. It has obligations for reporting payments to tax havens. Advance Pricing Agreements (APAs) were detailed, and transfer pricing audits have been conducted since 2013.


Belgium’s Transfer Pricing Landscape

Belgium, a member of the EU and OECD, introduced formal transfer pricing documentation requirements in 2016. This encompasses master files, local files, country-by-country reporting, and related notifications for multinational groups. The arm’s length principle is codified in Belgian tax law, aligning with OECD principles, and there are no formal disclosure requirements.

Defining Related Parties in Belgium

Belgium’s criteria for related parties pertain to direct or indirect involvement in management, control, or share capital. International Accounting Standards, such as IAS 24, offer further definitions. The scope includes relationships between a head office and its permanent establishment and relationships between permanent establishments, necessitating documentation of inter-company dealings for transfer pricing.

Recent Case Sheds Light on OECD Guidelines

A significant case in June 2021 revolved around the retroactive applicability of OECD 2017 Guidelines. The case involved royalty income from intangible asset licensing by a non-resident related party of a Belgian taxpayer. The court ruled in favor of the taxpayer, emphasizing the use of the 1995 version of OECD Guidelines for cases related to 2007, indicating that recent standards are applied, even to older cases.

Tax Havens & Reporting Obligations

Belgium’s tax legislation requires reporting payments made to tax havens, with specific criteria for what qualifies as a “tax haven.” The reporting obligation now extends to jurisdictions that don’t levy corporate income tax or have a lower effective tax rate on foreign income. Reporting is required for payments of at least 100,000 euros in taxable periods.

Advance Pricing Agreements and Transfer Pricing Audits

Belgium provides detailed procedures for obtaining Advance Pricing Agreements (APAs) and rules for dispute settlement regarding international tax treaties. Since 2013, the Belgian tax authorities have conducted yearly transfer pricing audits, with a standardized questionnaire, and an option for a pre-audit meeting is offered.

Transfer Pricing Documentation Requirements

Belgium follows the BEPS Action 13 requirements of the OECD, including master files, local files, and country-by-country reporting, which differ based on the size and complexity of enterprises. Detailed requirements for financial data reporting are outlined.

Paraphrased Details on Transfer Pricing Documentation

In Belgium, transfer pricing documentation requirements follow the BEPS Action 13 standards, and there are varying levels of documentation depending on the size and complexity of enterprises.

Mandatory Language and Notification Requirement

Documentation should be in one of Belgium’s official languages, but alternatives, such as English, are accepted. Country-by-country reports are encouraged to be filed in English.

Record Keeping

Belgian income tax legislation lacks specific rules for transfer pricing record keeping, so general income tax rules apply. Records should be kept until the end of the fifth year following the taxable period.

Penalties and Interest Charges

Specific penalties ranging from 1,250 to 25,000 euros are applied for non-filing, incorrect, or incomplete filing of transfer pricing documentation.

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