The Belgian tax authorities have decided to take the tax audits of multinational groups to the next level. From now on, the Belgian tax inspectors will mainly focus on transfer pricing and complex international tax issues (resulting from, among others, the implementation of the Anti-Tax Avoidance Directive or “ATAD”).
As the Belgian tax authorities are “flooded” with transfer pricing information and documentation following the rather recent requirement for qualifying taxpayers to file a Master file, a Local file, and country-by-country (CbC) reports (and notifications), the tax authorities have decided to invest considerably in manpower to review all these documents (as assisted by software tools) and to perform audits on certain detected issues. In doing so, a three-layered approach will be followed.
First of all, the Belgian Special Transfer Pricing Audit Department will increase its number of transfer pricing inspectors from 27 to 42.
Second, in enhancing cooperation with the Large Companies Department, specialists of the Special Transfer Pricing Audit Department will organize transfer pricing trainings for the audit centres of the Large Companies Department. To date, full-week trainings have already been conducted twice, and this training program will continue.
In addition, the Special Investigation Squad (Bijzondere Belastinginspectie – BBI / Inspection Spéciale des Impôts – ISI) has concluded a protocol with the Special Transfer Pricing Audit Department, whereby BBI/ISI will also focus more on transfer pricing issues, hereby coordinating and liaising with the Special Transfer Pricing Audit Department.
At the beginning of February 2018, the Special Transfer Pricing Audit Department will, as in prior years, send out its standard transfer pricing questionnaire or request for information to a few hundred taxpayers. This is expected to be the last time that this approach will be followed because for subsequent years, the Belgian tax authorities will use the information contained in the Master file, the Local file, and the CbC reports to select groups and companies for transfer pricing audits. The selection will still be driven by a data-mining tool—the “mantra data warehouse” software—applying risk analyses. Declining profits, business restructurings, losses, etc. will identify taxpayers as potential targets for a transfer pricing audit.
During the transfer pricing audit, all intercompany transactions will be audited, with the delineation of transactions, procurement arrangements, intangibles, and captives to receive particular attention this year.
Following the above described three-layered approach, a considerable number of (multinational) groups will undergo a thorough transfer pricing and international tax (in particular, with respect to ATAD topics) audit in the coming years.
Furthermore, the Belgian tax authorities will become increasingly involved in multilateral (joint) transfer pricing audits—particularly with the tax authorities in the Netherlands and Austria, with whom there already appears to be regular interaction.
Read a January 2018 report prepared by the KPMG member firm in Belgium
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
Yves de Groote | +32 2 708 44 34 |email@example.com
The KPMG logo and name are trademarks of KPMG International. KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever. The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at: + 1 202 533 4366, 1801 K Street NW, Washington, DC 20006.