BELGIUM Law and Practice Contributed by: Aldo Engels, Emile Bauwens, Emma Parduyns and Vincenzo Vilardi, Loyens & Loeff
In the TP Circular, the BTA endorses the arm’s length principle as the internationally accepted standard for dividing profits of a multinational group between its members. 9.3 Impact of the Base Erosion and Profit Shifting (BEPS) Project The OECD’s BEPS project has strongly affected Belgium’s transfer pricing landscape. Belgium has adopted numerous measures resulting from or inspired by the BEPS recom - mendations, including the following in the field of transfer pricing. • Belgium introduced a regime for the auto - matic exchange of information on tax rul - ings (including all arrangements concerning transfer pricing and the allocation of profits to permanent establishments) issued on or after 1 January 2017. • Belgium introduced transfer pricing docu - mentation and reporting requirements through country-by-country reporting and the two- tiered master file and local file as a result of the implementation of EU Directive 2016/881/ EU amending EU Directive 2011/16/EU regarding the mandatory automatic exchange of information in the field of taxation (BEPS Action 13). These requirements apply for financial years starting from 1 January 2016. Upon publication of the BEPS final reports, the Belgian Minister of Finance stated that the new OECD guidance on BEPS Actions 8–10 will be applied by the BTA in transfer pricing audits. The BTA has since referred to these documents and reports published in the framework of BEPS as part of their daily practice, and has even done so in a case evaluating a prior transaction. In this respect, the Ghent Court of Appeal (No 2016/ AR/455, dated 8 June 2021( “Uniclic” )) ruled that
the application of the DEMPE functions guid - ance for evaluating transactions entered into prior to its publication constitutes a disallowed retroactive application of the OECD Guidelines. The Belgian TP Circular adheres to the OECD Guidelines of 2017 and includes the OECD guid - On 14 December 2023, the Belgian legislature transposed Directive (EU) 2022/2523 on ensur - ing a global minimum level of taxation for multi - national enterprise (MNE) groups and large-scale domestic groups in the Union (known as Pillar II). The law includes a co-ordinated system of rules designed to ensure that large (domestic/MNE) groups with a consolidated revenue exceeding EUR750 million for at least two of the four previ - ous years are subject to a minimum effective tax rate of 15%. The Belgian implementation of Pillar II is applicable to financial years starting on or after 31 December 2023. ance on BEPS Actions 8–10. 9.4 Impact of BEPS 2.0 In the context of the implementation of Pillar II in Belgium, the Belgian legislature has adapted the timeframe during which the Belgian R&D tax credit can be refunded (reducing it from five to four years). This would lead to the qualification of the R&D tax credit as “qualified refundable tax credit” , which has a more favourable impact on the effective tax rate calculations under Pillar II as compared to a non-qualified refundable tax credit. 9.5 Entities Bearing the Risk of Another Entity’s Operations Belgium follows the OECD Guidelines in relation to risk allocation. Risk will thus be allocated to the entity performing risk control functions and having the financial capacity to bear the risk. The TP Circular provides that such entity is entitled
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