BELGIUM Trends and Developments Contributed by: Aldo Engels, Emile Bauwens, Emma Parduyns and Vincenzo Vilardi, Loyens & Loeff
should then be compared with the outcome of the traditional transfer pricing model or models in place. The outcome of such analysis can in our view only be interpreted as a mere indica - tion of alignment or non-alignment of profits with value creating activities, but not as a basis to perform a TP adjustment. Furthermore, a six- step DEMPE analysis and an identification of all transferred and used hard-to-value intangibles will need to be included in the Master File. This illustrates the particular focus of the Belgian tax authorities on transactions involving intangibles as perceived in audit practice. The new Belgian local file requires to file availa - ble transfer pricing documentation as an attach - ment to the Belgian form, including the OECD local file. In addition, CCAs, rulings and in-house insurance policies should also be attached to the Belgian local file. In principle, the Belgian company has the right to indicate that it does not avail of this documentation. However, the absence of the documentation may increase the probability of a transfer pricing audit. Pillar II On 14 December 2023, the Belgian legislature transposed Directive (EU) 2022/2523 on ensur - ing a global minimum level of taxation for mul - tinational enterprise 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. The law includes multiple TP aspects and pro - vides for an adjustment of GloBE income in case
cross-border transactions between related enti - ties were not priced at arm’s length. An adjust - ment is also foreseen under certain conditions with respect to transactions between entities within the same jurisdiction. Coalition Agreement On 31 January 2025, a new federal government was formed which published a government agreement including major tax policy changes. Below is an overview of announced measures relevant to transfer pricing. Please note that these changes are proposals and still need to be converted to (draft) legislation. Investigation and assessment periods The new government intends to shorten the investigation and assessment periods, which were recently extended. The standard period would remain at three years, for complex and semi-complex cases (including entities subject to TP documentation filing) the period would be lowered to four years and for cases of tax fraud the period would be lowered to seven years. Abolition of the (quasi) automatic tax increase and cash tax for audit adjustments Under the current rules, any additional taxable basis imposed at the occasion of a tax audit where a tax increase of at least 10% is imposed, constitutes a minimum taxable basis which can - not be offset with current-year or carried-forward deductions (the so-called “cash tax for audit adjustments” principle). Such tax increase is very often applied by the BTA in case of a uni - lateral TP adjustment. This automatic sanction mechanism will be abolished by the new government, in light of the above-mentioned “right to make an honest mistake” and a first offence would no longer be sanctioned by a tax increase. The cash tax for
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