Transfer Pricing 2025

BELGIUM Law and Practice Contributed by: Aldo Engels, Emile Bauwens, Emma Parduyns and Vincenzo Vilardi, Loyens & Loeff

1. Rules Governing Transfer Pricing 1.1 Statutes and Regulations The Belgian legal provisions of particular rel - evance to transfer pricing are Articles 26, 79, 185 and 206/3 of the Belgian Income Tax Code 1992 (ITC). • Article 26 ITC provides that the abnormal or benevolent advantages granted by a Belgian taxpayer to a non-Belgian company or estab - lishment should be included in the taxpayer’s taxable basis when granted to (among others) a non-resident related enterprise. • Articles 79 and 206/3 ITC provide for an anti- abuse rule disallowing certain deductions that would have applied to that part of the result that arises from abnormal or benevolent advantages received by a Belgian taxpayer from a related enterprise. • Article 185, Section 2(a) ITC governs the rec - ognition of profits on cross-border commer - cial and financial transactions for Belgian tax - payers that are part of multinational groups. Any profits not recognised by an arm’s length cross-border transaction are added to the taxpayer’s taxable profit. Article 185 ITC is considered the codification of the OECD’s arm’s length principle in Belgian tax law. • Article 185, Section 2(b) ITC allows a cor - responding downwards profit adjustment for corporate income tax purposes where profits are included in the taxable basis of a related foreign company located in a treaty jurisdic - tion. • Articles 321/1 to 321/7 ITC provide the obligation for taxpayers to file transfer pric - ing documentation if certain thresholds are exceeded (country-by-country reporting, master file and local file).

In February 2020, the Belgian Tax Administration (BTA) issued a circular letter on transfer pricing (Circ 2020/C/35) (the “TP Circular” ). In the TP Cir - cular, the BTA confirms adhering to the general principles included in the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations 2017 (the “OECD Guidelines” ). The TP Circular: • provides an overview of the different chapters of the OECD Guidelines (including guidance on financial transactions); • provides guidance on the allocation of profits to permanent establishments (PEs) (based on the Authorised OECD Approach as laid down in the 2010 report on the attribution of profits to PEs); and • includes the BTA’s interpretation and prefer - ence on specific topics. Finally, the following are also relevant in the con - text of transfer pricing: • Article 49 ITC (deductibility of expenses); • Article 54 ITC (deductibility of interest, royal - ties and service fees); • Article 55 ITC (deductibility of market-based interest); • Article 198, Section 1, 10° (deductibility of payments to tax havens in the context of “actual and sincere transactions” ) and • Article 344, Section 2 ITC (non-opposability of transfer of assets to an affiliated company established in a tax haven). Since the previous CFC-rule proved to be of little relevance in practice, Belgium recently shifted its CFC-legislation from Model B (transactional approach) to Model A (entity approach). The ATAD obliged member states to implement a CFC rule and left member states the option to either:

CHAMBERS.COM