Transfer pricing audits are on the rise: is your business prepared?

Combined with Belgium's stricter documentation requirements, this trend makes it more important than ever to review your group's transfer pricing policy regularly and proactively. Doing so can help minimise the risk of tax adjustments, penalties and lengthy audit procedures.

Stricter transfer pricing documentation requirements since 2025

Since 1 January 2025, Belgium's transfer pricing documentation requirements have become significantly stricter. Particularly when it comes to the Master File, Belgian requirements go beyond those prescribed by the OECD.

In our previous article, Transfer pricing documentation: stricter rules remain in force, we provide an overview of the key changes to Belgium's transfer pricing documentation requirements.

Recent case law also highlights the importance of a consistent and properly substantiated transfer pricing policy. One example is the Stellantis ruling by the Court of Justice of the European Union.

Transfer pricing audits are becoming increasingly common in Belgium

Over the past few years, we have observed a clear increase in the number of transfer pricing audits among our clients. This trend is evident in two ways: through dedicated transfer pricing audits and through the growing number of transfer pricing-related questions raised during general tax audits.

Notably, transfer pricing audits are no longer limited to large multinational companies. SMEs with international operations are also increasingly being targeted. The growing use of data mining and digital analytics tools means that businesses are more likely to come to the attention of the tax authorities.

Greater scrutiny of transfer pricing during general tax audits

One of the main reasons behind this development is the decentralisation of transfer pricing audits.

In the past, transfer pricing cases were handled exclusively by the specialised Transfer Pricing Unit. Today, local tax offices also raise targeted transfer pricing questions during routine tax audits. The Special Tax Inspectorate (STI) continues to focus on transfer pricing-related matters as well.

During corporate income tax audits, the tax authorities pay particular attention to:

• Intragroup payments;

• Financing arrangements;

• Management fees;

• Intellectual property (IP);

• Recurring losses;

• Business restructurings;

• Related VAT implications.

This development brings additional risks. Transfer pricing is a complex area of taxation that requires specialist expertise. When transfer pricing matters are addressed as part of a general tax audit, they do not always receive the attention or in-depth analysis they require. This can negatively affect the final outcome of the audit.

Stricter enforcement of penalties for missing or late documentation

Alongside the increase in audits, the Belgian tax authorities are applying their penalty policy more consistently. In the past, late or incomplete transfer pricing documentation sometimes went unnoticed. Today, this is becoming increasingly rare. In practice, we are therefore seeing penalties being imposed and collected more frequently.

As a general rule, a first infringement committed in good faith does not result in a penalty. From the second infringement onwards, an administrative fine of €1,250 may be imposed. Depending on the circumstances, this can increase to €25,000.

Transfer pricing audits are now conducted throughout the year

The timing of tax audits has also changed in recent years. Traditionally, the transfer pricing audit season began in the first quarter of the year. The Transfer Pricing Unit would typically launch the season in February by sending out targeted, thematic audit questionnaires.

Today, however, transfer pricing audits are taking place throughout the year. These often form part of general corporate income tax audits, during which the tax authorities also raise specific questions about transfer pricing.

Data mining and AI are playing an increasingly important role in tax audits

The tax authorities have access to an ever-growing amount of information to analyse businesses and identify potential tax risks. This is partly due to stricter documentation requirements, but also to the increasing use of electronic audit techniques, including AI-driven risk analysis and data mining.

In the 2025 financial year, 64.9% of all tax audits involved the use of these electronic audit techniques.

To identify businesses for potential tax audits, including transfer pricing audits, the tax authorities can combine information from various sources, such as:

• Mandatory transfer pricing documentation;

• Published annual accounts;

• Other publicly available company information that can easily be found online;

• Information exchanged with other countries.

How long does a transfer pricing audit take?

Due to the complexity of transfer pricing, tax audits can be time-consuming. A domestic transfer pricing audit takes an average of 18 months. The exact duration depends, among other factors, on the availability and quality of the documentation provided.

Where an audit involves an international element, the process can take considerably longer. This may be the case, for example, when an upward profit adjustment is made in Belgium and a corresponding downward adjustment is subsequently required in another country.

From documentation checks to economic analysis: substance over form

The tax authorities have long applied the principle of 'substance over form'. While audits previously focused mainly on whether the required transfer pricing documentation was in place, the authorities now examine much more closely whether the policy applied is economically justified.

For example, greater attention is being paid to the functional and risk profiles of Belgian entities and whether these are consistent with the transfer pricing policy applied.

A consistent and well-substantiated transfer pricing policy is therefore essential. This also includes submitting complete and accurate transfer pricing documentation on time, in compliance with Belgian legislation and the OECD Guidelines.