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.

Also the unequal treatment gets reviewed
Benefit in kind for housing: how to anticipate the higher or lower scenario?
Discrimination as regards the benefit in kind for housing has been highlighted on several occasions. Specifically, it relates to the unequal treatment of the same benefits, whether in terms of provision by a sole trader or provision by a legal person. In the most common cases, the benefit arising from being a limited company is almost four times more expensive taxation-wise than the benefit arisin
To reduce the financial burden
Start-up reduction on social security contributions for self-employed persons
The start-up reduction was part of the 'Summer agreement' and took effect on 1 April 2018. With this initiative, the government intends to reduce the financial burden of self-employed persons in start-ups, who often have low incomes at the start of their activity, thereby stimulating entrepreneurship.  Which self-employed persons are eligible?  The reduction measure applies to all se
A full overview
Your mortgage in the personal income tax return assessment year 2018
The new tax return form for personal income for tax assessment year 2018 has recently been published, so it is high time to examine how you can correctly fill in your mortgage in your personal income tax return. The biggest change in 2017 occurred in the housing taxation system of the Brussels-Capital Region. The other regions have all maintained a status quo compared to last year. A full overview
The labyrinthine of the personal income tax return made more user-friendly
Personal income tax return: changes to the form for assessment year 2018
On 6 April 2018, the model for the personal income tax return form relating to assessment year 2018 was published.
we will analyse the guidelines related to this reform
After the new inheritance law comes the ‘drastic’ reduction in inheritance tax… or not yet?
Further to the inheritance tax reform and the changes planned in the matrimonial property law, the Flemish government has also announced a change to inheritance tax. The aim was not only to simplify, relax and reduce this grief-related tax, making it more in tune with the new inheritance law, but also to create more alignment with new family relationships. There was talk of a ‘drastic’ change
Revolutionary decree
Belgian Tax Administration rebuffed: exit “subject-to-tax clause”?
On 25 January 2018, the Court of Cassation reached a remarkable decision in the context of allocation of taxing rights for professional income earned within an international context. The dispute In concreto, the case pertained to professional income earned by a professional cyclist. During the period 2007-2009, said cyclist was engaged by a Belgian employer and participated in numerous races a
Modernisation of the VAT system
Europe announces biggest VAT reform: first amendments to take effect as from 1 January 2019
Based on the knowledge that the current VAT system is no longer adapted to the rapidly-evolving digital and mobile economy, the European Commission has been striving for years for profound modernisation of the VAT system. A thorough study and investigation into the way in which this should be done specifically resulted in a proposal from the Commission, in December 2016, giving priority to simplif
The consequences for companies
VAT on your own construction work: an explanation of the amended law
On 29 November 2017 amendments were made to several points in the VAT Code. This amended law was explained by the administration on 12 February (in the Circular 2018/C/20). In this article we aim to consider the consequences of the amended law for companies constructing their own company building or carrying out their own repair/maintenance or cleaning work. Former situation Whenever a VAT-reg
Breaking news
Possibility to subject leasing to VAT from 1 October 2018
Minister Van Overtveldt's Cabinet has announced that the VAT rules with regard to the leasing of immovable property will be changed from 1 October 2018. 
Setting up a plegde on moveable assets will be easier
The new Pledge Act: introduction of a non-possessory pledge and extension of the retention of title
The new property law came into force as from 1 January 2018 (the act of 25 December 2016 establishing the amendment of various provisions with regard to the collateral on moveable assets, Belgian Official Journal 30 December 2016). This makes it easier to set up a pledge on moveable assets thanks to the introduction of a Pledge Register and it extends the effect of retention of title. Non-posse

Subscribe to our newsletter