Transfer Pricing 2025

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

Rejection of IFRS as basis for transfer pricing calculations In a recent ruling request, the Belgian Ruling Commission reaffirmed its position that IFRS- based figures are not an acceptable standard for determining transfer pricing outcomes. Although the applicant proposed to use IFRS manage - ment reporting figures at legal entity level to calculate arm’s length remuneration for local group entities, the ruling commission rejected this approach. It emphasised the need to avoid timing differences and mismatches with the stat - utory accounts used to determine the Belgian taxable base. This confirms the BTA’s (criticized) view that only statutory accounting standards (BE GAAP) should form the basis for transfer pricing calculations in a Belgian tax context. Audit Practice Transfer pricing cell within BTA The BTA avails of a dedicated transfer pricing unit which initiated a new wave of TP audits in 2025. In recent years, there has been a notice - able increase in both the number of TP audits conducted, and the number of specialised TP auditors within the transfer pricing unit of the BTA. The transfer pricing unit has grown from 35 inspectors at the beginning of 2022 to nearly 55 inspectors today. In addition, specially trained officials within the Large Enterprises division and the Special Tax Inspection conduct transfer pricing audits. This creates a climate of thor - ough investigation and enforcement that is also observed in other countries. A Belgian business outlet recently reported that in 2024, the transfer pricing unit within the BTA claimed a record EUR1.17 billion in additional taxes, of which EUR981 million allegedly stems from exceptional files involving a very small number of large multinational groups. Overall,

The ruling applicant performed a provisional IP valuation by using the discounted cash flows approach based on forecasted cash flows derived from the use of the IP by the licensee. A price adjustment mechanism is factored in, providing for a new valuation based on actuals and updated forecasts following the first year of commercialisation of the IP. In case the newly calculated value deviates by more than 20% from the originally agreed price, a retroactive price adjustment will take place. The Ruling Commission confirms this approach and agrees that the IP will no longer qualify as an HTVI following the first year of exploitation. Ruling on dual principal model The ruling validates a dual principal (co-entre - preneur) model within a centralised business model (CBM), where two group entities act as principals with distinct but complementary roles: one assumes the role of the operational princi - pal, overseeing the day-to-day management of the supply chain, production, and sales execu - tion, while the other functions as the strategic principal, responsible for developing, steer - ing and adjusting the group’s overall strategy through its executive committee and key per - sonnel. The ruling confirms that the application of a profit and loss split method, supported by a CUP analysis for strategic services, is consistent with the arm’s length principle. The allocation of entrepreneurial profit is based on a RACI-driven functional and risk analysis reflecting the shared responsibility over key value drivers. The remu - neration for strategic services is also confirmed as tax-deductible under domestic law. This ruling demonstrates that a well-substantiated co-entrepreneur model, with clearly delineated strategic and operational roles, can be compliant with the arm’s length standard.

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