In Belgium, a draft law that would introduce country-by-country reporting and formal transfer pricing documentation requirements currently is in the process of being finalized.
Under the pending legislation, Belgium would be introducing country-by-country (CbC) reporting requirements. The CbC rules in Belgium would be compliant with the OECD and EU provisions. Qualifying groups (with a consolidated gross turnover exceeding €750 million) would have to file the CbC report with the Belgian tax authorities within 12 months after the closing of the consolidated financial statements of the group.
Belgium is considering introducing requirements for filing a "Master file" and a "Local file" for each Belgian company or permanent establishment (of a multinational group) that satisfies one of the following thresholds (to be assessed on the basis of the stand-alone financial statements of the Belgian entity—company or permanent establishment—concerned for the preceding financial year):
Master file: The contents of the Master file would follow closely the format put forward by the OECD. The Master file would have to be filed with the Belgian tax authorities within a period of 12 months after the close of the reporting period of the group. The filing format practicalities would be described in a to-be-issued Royal Decree.
Local file: The Local file (also based on the OECD format) would have to be provided in a format consisting of two parts.
The current version of the draft law foresees that the Local file would need to be filed electronically together with the Belgian income tax return.
Companies and permanent establishments required to satisfy the new rules and that fail to satisfy the reporting and filing requirements would be subject to penalties ranging from €1,250 to €25,000.
The transfer pricing documentation requirements would be introduced as from assessment year 2017 (i.e., financial years ending on 31 December 2016 or later).
The Belgian business community has expressed concerns and queries about the practicalities and feasibility of the filing requirements (especially concerning the Local file) as currently pending in the draft law. It may be that some changes could be made during the legislative process to the pending draft law measures. Notwithstanding, it appears that Belgium will soon join the ranks of other countries that have introduced country-specific transfer pricing documentation requirements. Belgian taxpayers need to consider these provisions and start taking necessary steps and actions to prepare for these new requirements.
For more information, contact a tax professional in Belgium with KPMG’s Global Transfer Pricing Services group:
Dirk Van Stappen | +32 3 821 19 18 | firstname.lastname@example.org