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Belgium introduces new transfer pricing documentation & country-by-country reporting requirements

Many companies must start to prepare now for the implications of new tax laws compliant with OECD and EU provisions

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transfer pricing specialist Belgium, Marie-Lise Swinne

Marie-Lise Swinne, Tax Consult, Belgium

"The Program Act introduces a statutory transfer pricing documentation requirement and applies from assessment year 2017. Therefore, it is important that companies get ready proactively by starting the process of gathering the required information."
Marie-Lise Swinne, Partner, Tax Consult, Brussels

Marie-Lise Swinne, Partner at Tax Consult in Brussels and a key member of the association's International Tax Services Group, explains in this short article why companies must take note of these changes (as part of wider international tax developments) and how they could be affected by the introduction of country-by-country-reporting (CbCR) and formal transfer pricing documentation requirements from assessment year 2017.  

Which companies will CbCR apply to?

CbCR requirements have been introduced to comply with the provisions set out by the OECD and EU and will be applicable to groups with consolidated gross turnover of over Euros 750 million (gross turnover includes gross operating revenues, gross financial revenues and gross extraordinary revenues). Swinne adds: "Qualifying groups will have to file the CbCR reports within 12 months of the closing of the group's consolidated financial statements."

Additional transfer pricing related reporting requirements

In addition to the CbCR reporting requirements, Belgium has made it mandatory for companies to file a 'Masterfile' and a 'Local file' for each Belgian company or permanent establishment (‘PE’) that meets one of the following thresholds (each will be assessed on a stand-alone basis for the preceding financial year):

  • Operating and financial revenues of Euros 50 million
  • Total balance sheet total of Euros 1 billion
  • Annual full time employees average equivalent to 100.

The Masterfile must be submitted by means of a form to the Belgian tax authorities within 12 months after the closing of the consolidated financial statements.

The 'Local file’ will be in 2 parts:

1. Information on the local entity will have to be filed by all companies or PEs meeting one of the above thresholds

2. A detailed information form that includes the entire transfer pricing analysis (financial data, comparability analysis, selection of the most appropriate transfer pricing method). This will need to be filed by companies or PEs meeting the above thresholds and that have cross border transactions exceeding Euros 1 million in total.

Penalties ranging from Euros 1,250 - 25,000 will be applied to companies or PEs that fail to satisfy the reporting and filing requirements.

For assistance with transfer pricing in Belgium

Contact Marie-Lise Swinne, a member of Tax Consult's transfer pricing team in Brussels. Marie-Lise is at your disposal to analyse your specific case and advise you on the steps you need to take.

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Transfer pricing legislation & BEPS implementation varies widely across the world