For the Belgian tax administration, transfer pricing is one of the top objectives for this year. This is why the administration has pulled out all the stops in reinforcing its transfer pricing audit team. The BBI was also recently given a boost with a wealth of knowledge in the area of transfer pricing. Companies will be targeted from three angles when it comes to transfer pricing: audits of large companies, audits by the transfer pricing audit team and audits by the BBI. The audits are focused on companies that have exceeded the threshold values for the documentation requirements for transfer pricing. Audits will also be carried out at groups at which no single entity is required to submit documentation, however.
A recent article in De Tijd indicates that the transfer pricing audits prove especially lucrative for the tax administration. The 419 TP dossiers started up over the past 3 years have together already brought in some 202 million euros for the Belgian treasury.
Every audit starts with a standardised questionnaire. The list contains 31 detailed questions. The questionnaires recently sent out go into somewhat more depth than in past years. Companies must, for instance, provide a description of the different flows of goods and services, the internal structure and organisation of every entity in the group, the economic circumstances that affect pricing and the licence agreements. A pre-audit meeting may be scheduled in advance to clearly delineate the scope of the investigation. The audits are often very time-consuming and are accompanied by an in-depth audit of the company’s analytical figures. As a company, you are therefore required to break the figures down by business unit.
Corporation tax reforms
Since the reforms to corporation tax, it is important to take a number of issues into account. Corrections which were imposed in the context of a tax audit can, for instance, be regarded as the minimum taxable basis against which no tax deductions can be set off. A Belgian entity must also make corrections in the event it is the party that benefits. This is unprecedented on the international level. In such a case, no losses carried forward or other deductible items can be set off against the part of the profit formed by an advantage received from a group entity.
Are your internal transactions entirely in accordance with legislation and are you ready for a transfer pricing audit? Then contact your account manager or one of our specialists via email@example.com.
We base our advice on current legislation, interpretations and legal doctrine. This does not prevent the administration from being able to challenge it or to change existing interpretations.