BELGIUM Law and Practice Contributed by: Aldo Engels, Emile Bauwens, Emma Parduyns and Vincenzo Vilardi, Loyens & Loeff
3.4 Ranges and Statistical Measures Belgium does not require the use of ranges or statistical measures. In the TP Circular, the BTA recognises that trans - fer pricing is not an exact science, and a trans - fer pricing analysis will often result in a range of values in which the applicable price is situated. If the retained comparables are highly compara - ble and of equally high quality, each point within the full range is considered acceptable for the BTA. However, statistical methods can be used to increase the reliability of the results. The BTA indicates that they favour the inter - quartile range (IQR) approach and will accept the result if the tested party falls within the IQR. The BTA further provides that an adjustment is needed if the result of the tested party falls out - side the (IQR/full) range. Such adjustment will be made to a point within the range which is aligned with the facts and circumstances of the tested transaction. If it is not possible to designate a specific point within the range, the BTA’s prefer - ence is to use the median. 3.5 Comparability Adjustments Under Belgian law, there is no strict obligation to apply comparability adjustments. However, the position of the Belgian tax administration (BTA), as outlined in the Transfer Pricing Circular, is consistent with the OECD Guidelines: compa - rability adjustments should only be made if they improve the reliability of the analysis. The BTA emphasises the importance of proper documentation to support both the purpose and the reliability of any adjustment. In particular, adjustments to account for differences in work - ing capital between the tested party and the comparables may be justified and are generally accepted.
When it comes to year-end adjustments, it is important to note that the taxable result of a Bel - gian company is based on its statutory account - ing result. Consequently, any year-end transfer pricing adjustments must be booked before the closing of the statutory accounts in order to be recognised for tax purposes, unless the taxpayer opts to make a unilateral upward adjustment via the tax return. Since the BTA relies on the statutory accounts to assess the arm’s length nature of intercompany transactions, it is imperative that such adjust - ments are reflected in the accounts of the rel - evant financial year. In practice, during audits, the BTA expects the arm’s length character of a taxpayer’s remunera - tion to be evaluated on an annual basis, with adjustments required if the result of the tested transaction falls outside the relevant arm’s length range, unless a valid justification is provided. Belgian law does not impose notable rules spe - cifically relating to the transfer pricing of intan - gibles. The BTA generally applies the guidance included in Chapter VI of the OECD Guidelines to evalu - ate the arm’s length character of a transaction involving intangibles. The TP Circular explicitly emphasises the importance of identifying those entities performing the so-called DEMPE func - tions (ie, development, enhancement, mainte - nance, protection and exploitation). According to the BTA, entities controlling important risks with respect to the DEMPE functions should be 4. Intangibles 4.1 Notable Rules
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