Transfer Pricing 2025

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

• In the framework of a business restructur - ing of “limited risk” entity remunerated with a transactional net margin method, the BTA considers that restructuring costs should be re-charged to the foreign group entity that made the decision to restructure and/or that benefits from the restructuring. • According to the BTA, if the actual result of a company falls outside the range of arm’s length outcomes, an adjustment should be made to the median of that range unless spe - cific arguments are available to justify another point within the range. • Synergies obtained through centralised procurement should be reallocated to the group and a centralised procurement com - pany should be remunerated with a cost-plus method (unless it can be demonstrated that another method is more appropriate given the added value generated by the entity). The Ruling Commission delivered a negative rul - ing on the transfer pricing consequences of a VAT refund for limited risk distributors of subsidised pharmaceutical products. This ruling reflects the position of the BTA on this specific topic, which has been the subject of controversy dur - ing recent years. The case concerned two com - panies subject to compensatory contributions on turnover regarding subsidised medicines, paid to the Belgian National Institute for Health and Disability Insurance (NIHDI). Both reached an agreement with the Belgian VAT administra - tion accepting that these contributions result in a reduction of the taxable amount for VAT, entitling them to a refund of the VAT included in the con - tributions effectively paid to the NIHDI. The com - panies wished to obtain confirmation that these VAT refunds can be included in the calculation of the operating margin remuneration under the TNMM that both companies should realise for their routine distribution activities. The Ruling

Commission and BTA take the position that this is not the case as only Belgian distributors are entitled to such refund, which should therefore be included in their taxable basis on top of the ordinary operating margin. Finally, reference can be made to the anti-abuse rule in Articles 79 and 206/3 ITC disallowing cer - tain 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 (see 1.1 Stat- utes and Regulations ). 11.4 Financial Transactions In Belgium, there is no specific legislation regu - lating the transfer pricing aspects of intra-group financial transactions. However, with reference to 1.1 Statutes and Regulations , Article 55 ITC provides a legal framework for limiting the deductibility of inter - est that exceeds “normal” market rate. If paid interest exceeds what would be considered at arm’s length (ie, above “normal” market rates), the excess portion is non-deductible. The bor - rower has the burden of proof to demonstrate that the interest rate is not excessive. This provision provides for a safe-harbour rate for non-collateralised loans without a fixed term (eg, a classic current account). The safe harbour rate equals the MFI rate published by the Nation - al Bank of Belgium for loans up to EUR1 million with a variable rate and an initial term up to one year, granted to non-financial companies in the month of November of the calendar year preced - ing the year to which the interest rate relates, plus 2.5%. This “safe harbour” , however, does not apply to cash pool arrangements.

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