A law (dated 1 July 2016) introducing country-by-country reporting and formal transfer pricing documentation requirements has been published in the Belgian Official Gazette of 4 July 2016. Now that Belgium has joined the ranks of countries that have introduced country-specific transfer pricing documentation requirements, qualifying Belgian taxpayers need to start taking necessary steps and actions to prepare for these new requirements in due time.
The introduced country-by-country (CbC) rules in Belgium are largely compliant with the OECD and EU provisions. Defined Belgian entities of qualifying groups (with a consolidated gross turnover exceeding €750 million in the year preceding the reporting year) will have to file the CbC report with the Belgian tax authorities within 12 months after the closing of the consolidated financial statements of the group.
Master file, Local file
Belgium has introduced requirements for filing a "Master file" and a "Local file" for each Belgian company or permanent establishment (of a multinational group) that exceeds one of the following thresholds (to be assessed on the basis of the stand-alone financial statements of the Belgian entity concerned for the preceding financial year):
- A sum of operational and financial income (excluding extraordinary income) of €50 million
- A balance sheet total of €1 billion
- An annual average of employees of 100 full-time employees
Master file: The contents of the Master file follow closely the format put forward by the OECD. The Master file will have to be filed electronically with the Belgian tax authorities within a period of 12 months after the close of the reporting period of the group. The filing format practicalities will be described in a Royal Decree that still needs to be issued.
Local file: The Local file will have to be provided in a specific format consisting of two parts (forms in fact).
- One part of the Local file form will contain some general information that will have to be completed and filed by all companies or permanent establishments exceeding one of the three thresholds (listed above).
- The second part of the form (a more detailed one, providing mainly qualitative and quantitative information on the various sorts of intercompany transactions) will only be completed and filed by companies or permanent establishments that have cross-border intragroup transactions exceeding in total a value of €1 million. In instances where the company or permanent establishment includes more than one business unit, the second part of the form will have to be completed and filed per business unit exceeding the €1 million threshold.
The law foresees that the Local file needs to be filed electronically together with the Belgian income tax return.
These new requirements are being introduced for financial years starting on 1 January 2016 or later.
Failing to satisfy the reporting and filing requirements will result in penalties ranging from €1,250 to €25,000, as from the second infringement.