New Belgian Transfer Pricing documentation rules

Are you ready for the new Belgian transfer pricing documentation obligations?

Belgium has enacted specific transfer pricing (TP) documentation requirements into its tax law. The relevant articles of the law introduce a three-tier documentation approach as provided under OECD’s BEPS Action Point 13:

  1. A Country-by-Country (“CbC”) Report
  2. A Master File covering information relevant to the entire group of companies
  3. A Local File consisting of:
  • General information on the local entity
  • Detailed quantitative information on its inter-company transactions

The law also establishes specific TP documentation penalties, ranging from 1,250 to 25,000 euros for non-compliance (late, incomplete, or no filing) with the new TP documentation requirements. Non-compliance is also likely to increase your risk of a tax audit.

Two people discussing a PwC brochure

Is your business impacted?

A Belgian ultimate parent entity of a multinational group with a gross consolidated group revenue of at least 750 million euros should file a Country-by-Country Report. Under certain conditions, the Belgian entity that is not the ultimate parent entity of the multinational group may be required to file a County-by-Country Report directly with the Belgian tax authorities.

A Belgian entity of a multinational group exceeding at least one of the following criteria needs to submit a Master File and a Local File:

  • operational and financial revenue of at least 50 million euros 
  • balance sheet total of 1 billion euros
  • annual average number of employees of 100 full-time equivalents

The first part of the Local File (on general information of the local entity) should be filed when at least one of the above criteria is exceeded. However, the second (more detailed) part of the Local File should only be completed when at least one of the business units of the entity has realised intra-group cross-border transactions of more than 1 million euros. This part of the Local File focuses specifically on quantitative data of all cross-border intercompany transactions per type of transaction.

An optional materiality threshold of 25,000 euros for inclusion of transactions has now been formally introduced.

Clock icon

When should documentation be filed?

The first reporting period links to accounting years that started on or after 1 January 2016.

The Master File and Country-by Country Report should be submitted no later than 12 months after the last day of the reporting period concerned. However, the Local File should be filed with the tax return concerned.

The second part of the Local File only needs to be submitted for the first time for accounting years that started on or after 1 January 2017.

The filing of the notification form identifying the reporting entity for CbC reporting purposes has been postponed to 30 September 2017 for accounting periods that started on or after 1 January 2016.

How we can help

With more than 50 full-time transfer pricing experts in Belgium and a proven approach to helping clients comply with obligations in the most efficient manner, we have the required knowledge and expertise to help you fully understand and comply with the new TP documentation requirements.

This includes from a technology perspective; we can share best-practice processes on using data extraction and collection tools as well as documentation drafting technology for the most efficient and coherent roll-out of the new TP documentation requirements.

We have developed a proprietary approach to support you with full compliance that consists of the following steps:

Timeline for Transfer Pricing documentation process