Increased transfer pricing audit activity in Belgium

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Since the beginning of this year a significant increase in the activity level of the Belgian transfer pricing audit cell has been observed. Tax payers should carefully consider their transfer pricing policies and documentation so as to be ready for such a detailed transfer pricing audit.

A large number of multinational groups with operations in Belgium have received lengthy transfer pricing questionnaires. Such transfer pricing questionnaire is the first step of what typically becomes a detailed transfer pricing audit. Amongst the groups having received such transfer pricing questionnaire, we observe both large foreign-owned companies operating in Belgium either under a company or under a branch format, as well as Belgian-based multi-national companies, but also SMEs.with intercompany transacrions The profile of these companies is diverse and includes industrial and trading companies, holdings, as well as financing centers.

The increased audit activity is a result of an increased number of transfer pricing-focused inspectors within the Belgian tax authority. Over the previous months, regional tax inspectors have been following specific transfer pricing courses. These inspectors are now actively involved in transfer pricing audits, which results in this significant increase in the number of transfer pricing audits being initiated in Belgium. The amount of companies receiving these questionnaires is now apparent.

These transfer pricing audits start with a request to complete a lengthy transfer pricing questionnaire (vraag om inlichtingen / demande de renseignement). The information requests contain a list of questions which relate to the company’s overall business, intra-group transactions, functions, risks and assets (including intangible assets). In addition, detailed information regarding the existence of transfer pricing documentation and methodology is requested. In principle, the answers to these questionnaires need to be provided within 30 days.

Within this changing transfer pricing environment, it is important for Belgian taxpayers with intercompany transactions to prepare themselves for such transfer pricing audit by ensuring their transfer pricing policies are at arm’s length and that they have underlying supporting transfer pricing documentation available.