Belgian introduction mandatory documentation following BEPS action plan?

In light of the OECD initiative with respect to 'Base Erosion and Profit Shifting', the OECD has issued in February guidelines with regard to the implementation of transfer pricing documentation and 'country-by-country' reporting.

From the report of September 2014, it appears that transfer pricing documentation based on 3 documents is proposed. A complete transfer pricing file needs to contain a Masterfile (standardized information for all group entities), a local file (with respect to material transactions of the local entity) and country-by-country reporting.

Introduction of country-by-country reporting

The 'country-by-country ("CbC") reporting' contains information on the global allocation of the income of the group, a number of indicators with respect to the economic activity within the group, a list of the different entities, etc.

According to the recent guidelines, the first CbC reports need to be filed by multinationals for the accounting years starting as from January 1, 2016. Groups will have time to do this until 1 year after the closing of the accounting year concerned.

Only multinational groups with a yearly consolidated income of less than 750 million EUR will obtain an exemption to file the yearly CbC report. Although no further exemptions will be made, approximately 85% to 90% of the companies will be excluded based on this criterion. In 2020, an evaluation of the threshold of 750 million EUR is foreseen. In principle, it is the parent company of the group who needs to file the CbC report.

It is important to note that the information included in the CbC report needs to be treated confidentially. The information should not be used to perform transfer pricing corrections, but is aimed to be a risk management tool for the tax authorities. The CbC report should allow evaluating transfer pricing risks and other BEPS related risks. The information in the CbC report will be exchanged automatically between the tax authorities of the countries in which the group is active. An implementation package for this exchange still needs to be developed.

Implementation in Belgium

From the answer to the parliamentary question of March 11, 2015 of Mr. Peter Vanvelthoven (CRIV 54 COM 11 - Question nr. 2774), it appears that also in Belgium, the introduction of mandatory transfer pricing documentation is being considered. The introduction of mandatory transfer pricing documentation should be well-balanced and the provision regarding the burden of proof should be clear.

Transfer pricing audit team

Furthermore it appears that the Special Transfer Pricing Audit Team (Transfer Pricing Cell) will be further expanded. During recent years, the number of fulltime equivalents has already increased. Via internal mobility and specialized trainings, the Transfer Pricing Cell will be further expanded in the near future.

With respect to the potential extension of the research and assessment period regarding transfer pricing, the answer is negative. The normal research and assessment period will in principle remain applicable.