BELGIUM Law and Practice Contributed by: Aldo Engels, Emile Bauwens, Emma Parduyns and Vincenzo Vilardi, Loyens & Loeff
12. Co-Ordination With Customs Valuation 12.1 Co-Ordination Requirements Between Transfer Pricing and Customs Valuation Belgium does not require co-ordination between transfer pricing and customs valuation. However, transfer pricing adjustments can have a material impact on customs values when the latter are based on the company’s transfer pric - es. The Court of Justice of the European Union recently ruled (C-529/16, dated 20 December 2017( “Hamamatsu” )) that transfer prices cannot be used to determine customs values if they are subject to retroactive transfer pricing adjust - ments. The Belgian VAT authorities have not taken a position in light of this recent case law. It is nev - ertheless advisable for companies to obtain con - firmation from the Belgian VAT authorities on the application of transfer prices on customs values in the event of retroactive transfer pricing adjust - ments. In this way, the possibility of overpaid customs duties not being recoverable can be avoided. In their circular letter 2018/C/9 on cus - toms valuation, the Belgian customs authorities set out their position regarding the acceptability of an intra-group price as customs value and amendments to the customs value based on a transfer pricing adjustment. 13. Controversy Process 13.1 Options and Requirements in Transfer Pricing Controversies Taxpayers can challenge the results of a transfer pricing audit in administrative proceedings. If the proceedings in the administrative phase do not
For other loans (eg, with a fixed term), the mar - ket rate is taken as the benchmark. This rate is not defined, but according to the law, it must be determined by considering the specific charac - teristics of the transaction, such as the associ - ated risk, the financial condition of the debtor and the loan’s maturity. The TP Circular is largely consistent with Chap - ter X of the OECD Guidelines. However, certain preferences expressed by the BTA in the Circular may go beyond what is set out in Chapter X or provide additional insights into the BTA’s specific interpretation. Examples include the following. • The BTA considers that a cash pool position which remains unchanged for more than 12 months should be reclassified and priced as an intercompany loan, rather than as a short-term cash pool borrowing. Although this position has been heavily criticised, it is still applied by the BTA during audits (see 11.3 Unique transfer pricing Rules or Practices ). • In the context of cash pooling, the TP Circular assumes that all participants have the same credit rating, based on the presumption that they effectively guarantee one another. • The TP Circular refers to the concept of “implicit support” within an MNE group, which may impact the credit rating of a bor - rower. • For the pricing of guarantee fees, the BTA expresses a preference for the yield approach, whereby the fee is determined by comparing the interest rate applicable to a borrower with and without a guarantee. • In the context of intercompany financing, the debt capacity of the borrower should be taken into account to assess whether the bor - rower could have obtained similar financing from an independent lender.
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