Transfer pricing documentation – models now published

Under the Programme Act of 1 July 2016 transfer pricing documentation became compulsory in Belgium. The new law is the result of the BEPS reports, issued by the OECD in October 2015 (see the July 2016 edition of Informatief for a comprehensive discussion on the subject). On 2 December the detailed forms together with the explanatory notes were published in the Belgian Official Journal. An overview of these follow below.

1. Country-by-Country (CBC) reporting – form 275 CBC

This report must be submitted in Belgium if a Belgian company is part of a multinational enterprise that makes a consolidated gross group revenue of €750 million or more. The report only has to be submitted in Belgium if the group’s ultimate parent entity is based in Belgium. This ultimate parent entity is defined in the act as ‘the group entity that has interests in other group entities and whose shareholders are not other group entities themselves’. In other words, it is the top holding company that is also required to compile the annual consolidated financial statements.

The country-by-country report must be submitted no later than 1 year after the reporting period has ended. If the report is not submitted in Belgium but that group has an entity in Belgium then there is an obligation of notification (275 CBC NOT): the authorities must be informed by the last day of the reporting period who shall submit the CBC. There is an extension for the first notification until 30-09-2017 for the period ending on 31-12-2016. The intention is that the exchange programmes between nations mean that this report will also reach the Belgian authorities.

The report must cover the distribution of the income, taxes and activities of a multinational enterprise for each territorial jurisdiction. While transfer pricing is in principle not at issue, it gives the authorities an excellent overview of where income, taxes and activities are located. This allows for improved risk assessments and more focused checks.

2. The master file - report 275 MF

Belgium is also introducing the obligation to compile a master file. Every Belgian group entity that has exceeded one of the following criteria in the financial year preceding the last closed financial year must fulfil this obligation:

  • Either: a total of €50 million in operating and financial revenue, with the exception of non-recurrent earnings. According to the explanatory memorandum this pertains to all section 7 accounts, with only item 76 (extraordinary income) to be deducted;
  • Or: a balance sheet total of €1 billion;
  • Or: a workforce, averaged over the year, of 100 fulltime equivalents (FTE). In our view the explanatory memorandum states that the calculation of the FTEs is the same as that included in the social balance sheet of the annual financial statements.

The master file provides an overview of the multinational enterprise, and specifically of the nature of its activities, the intangible fixed assets, the financial transactions performed within the group, its consolidated financial and tax position, the general transfer pricing policy and the global allocation of its income and economic activities. This file must also be submitted within the year following the group’s reporting period (for the annual consolidated financial statements).

3. The local file – report 275 LF

The same criteria that apply to compiling a master file hold for whether or not a company is required to compile a local file. The local file consists of an introductory general section (which must be completed by all companies that meet one of the above criteria) and a second detailed form for each business unit. The second section only has to be completed if the intercompany transactions collectively exceed the annual threshold of €1,000,000. The local file is submitted together with the corporation tax return.

Pease note that, if you are not required to fulfil these formalities, you must nevertheless still ensure that your internal transfer pricing is on market terms and that you could be required to corroborate this at any time during a tax audit.

If you would like to know more about the new requirements with regard to transfer pricing documentation for your company, please do not hesitate to contact us.

7 consequences of incomplete registration
The importance of correct registration in the crossroads bank for enterprises in 2019
Each company has its unique registration in the Crossroads Bank for Enterprises (CBE). However, businesses often forget to keep this registration up to date. This may have unpleasant consequences. The CBE is a register managed by the Federal Public Service Economy in which all basic information about companies and their establishments is kept. The CBE centralises the basic information about com
Are they 50% or 100% deductible?
Reception costs of a publicity event are only deductible in part
According to the letter of the law (art. 53, 8° of the Income Tax Code (WIB), reception costs incurred during a business related event are only 50% deductible. For some time already, there have been ongoing discussions concerning the question whether or not this limited deductibility likewise applies when the reception costs are incurred within the context of a publicity event.  And do these
Not as obvious as many people think
Restructuring? Think about your directorships
The restructuring of a company involves many aspects. An element that is often forgotten is the directorship positions held by the acquired company in a number of other companies. The question is what will happen with these directorships once the company holding them disappears as a result of a merger or division. In many cases, the intention is that these directorships will continue uninterrupted
This year it will be more likely that people will need to respond
Simplified declaration proposal? Check it thoroughly and respond in good time!
The number of simplified declaration proposals has been on the rise for several years now. This year, more than 3.2 million Belgians will receive such a proposal. If nothing needs to be changed, you do not need to respond either. However, if something does need to change (i.e. the Tax Authorities hold incorrect or incomplete data), then you must respond in good time. This year,
Also companies are required to follow the procedure
Conflicts of interest in the new Companies and Associations Code
The new Companies and Associations Code (CAC) entered into force on 1 May 2019. The CAC provides for broader and stricter regulations concerning conflicts of interest that may arise within an organisation. Broadening the scope of regulation means that the directors of cooperative companies, non-profit organisations (ASBL/VZW) and foundations&n
Important things you have to know
Some do’s and don’ts when making a bank donation
The bank donation is still a very popular way of donating money by bank transfer. This is not surprising: if it is carried out according to the rules of the game, the bank donation is a valid donation, without (too much) red tape and without incurring gift tax. However, there are a few rules that threaten to spoil the game if they are not followed correctly. Hence some tips that you should keep in
The further course of the relationship between the UK, the EU and the EEA
What impact will Brexit have on your corporate income tax?
For the time being, the United Kingdom (UK) is still part of the European Union (EU) and the European Economic Area (EEA). The UK has since been given until 31 October 2019 at the latest to implement Brexit. This means that cross-border transactions with the UK continue to fall within the scope of EU directives. However, after Brexit, the UK will no longer be able to rely on these directives. This
Less strict circular for catering sector
New circular regarding the VAT rate for restaurant and catering services
On 1 January 2010, the VAT rate for restaurant and catering services was reduced to 12%. This rate only applies to food. Drinks (including non-alcoholic beverages and coffee and tea) are still subject to the standard VAT rate of 21%. On 23 December 2009, the administration published an explanatory note in which it detailed how an overall price for a menu (including drinks) needed to
From now on, also 'high' fixed cost deductions for self-employed persons
Personal income tax return form AY 2019: several new features explained
From now on, also 'high' fixed cost deductions for self-employed and other changes  The new personal income tax return form for assessment year 2019 was published on 7 April, the starting shot for the annual tax return race. For the Flemish tax return, "only" 6 codes have been added, and for the Walloon and Brussels tax returns, "only"
Does the new definition of a company have any consequences for your organisation?
Broader requirements for registration with the CBE - clarification for unincorporated companies
In a previous article, we explained that the introduction of a definition of 'company' in the new Companies and Associations Code (CAC) also affects the registration with the CBE (Crossroads Bank for Enterprises). In this article, we will discuss in more detail the registration obligation for unincorporated companies.  Consequences of the broader definition of a company  With the new

Subscribe to our newsletter