Worldwide transfer pricing reference guide 2014

Belgium (continued)
Frequency of tax audit and transfer pricing scrutiny by the tax authority (continued)
The 2006 administrative guidelines contain a list of events that could trigger a high risk of transfer pricing scrutiny during an audit:
• Structural losses
• Business reorganizations
• Migration of businesses
• The use of tax havens or low tax rate countries
• Back-to-back operations
• Circular structures
• Invoices for services-sent at the end of the year (i.e., management services)
The tax authority indicated in its November 2006 circular that transfer pricing cases associated with business restructurings will be
among the priorities in their audit efforts.
These developments have further increased the focus on transfer pricing, especially considering the evolution of the Belgian transfer
pricing audit relationship with other tax authorities. Transfer pricing audits have become more aggressive. They are being approached
from an economic perspective and are focused on specific issues like business conversions and restructurings.
Considering that the Belgian transfer pricing audit cell is working closely with other tax authorities, it is expected that the focus on
transfer pricing will increase.
APA opportunity
The 2003 corporate tax reform introduced a general ruling practice under the Belgian tax law. Additional guidance in this respect is
provided through various Royal Decrees.
The Service for Advance Decisions became an autonomous department as of 1 January 2005, as a result of the law of 21 June 2004.
More than 100 specialists in various domains of taxation, including transfer pricing, assist the committee. This service has increased
flexibility in the ruling process and shortened the decision period that is usually between two and four months from the filing date in case
of unilateral APAs. This committee is also able to rule prospectively on corresponding downward profit adjustments under Article 185,
§2, thus offering significant transfer pricing planning opportunities.
Expected reaction to OECD Report on BEPS
The Belgian tax administration has not yet taken a formal position with respect to the debate around BEPS. There is not yet any
proposed legislative change to the tax law or to the documentation requirements regarding transfer pricing. However, the Belgian tax
administration is actively taking part in the discussion around BEPS and as a member country of the OECD, changes to the Transfer
Pricing Guidelines are expected to affect Belgium. As such, it is expected that the BEPS debate is likely to have an impact on the tax audit
climate (whereby the number of discussions around substance, PEs, etc., are expected to increase).
Worldwide transfer pricing reference guide
40