In Belgium, 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.
Under the new legislation, Belgium introduces country-by-country (CbC) reporting requirements. The CbC rules in Belgium are compliant with the OECD and EU provisions. Qualifying groups (with a consolidated gross turnover exceeding €750 million) 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 satisfies one of the following thresholds (to be assessed on the basis of the stand-alone financial statements of the Belgian entity—company or permanent establishment—concerned for the preceding financial year):
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 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 to-be-issued Royal Decree.
Local file: The Local file will have to be provided in a specific format consisting of two parts.
The law foresees that the Local file needs to be filed electronically together with the Belgian income tax return.
Penalties, effective date
Companies and permanent establishments required to satisfy the new rules and that fail to satisfy the reporting and filing requirements will be subject to penalties ranging from €1,250 to €25,000, as from the second infringement.
The transfer pricing documentation requirements are being introduced as from assessment year 2017 (i.e., financial years ending on 31 December 2016 or later).
Despite the concerns and queries of the Belgian business community expressed about the practicalities and feasibility of the filing requirements (especially concerning the fact that in practice the Local file will need to be filed before the filing due date of the Master file), the law has been processed, approved and published at a rapid pace without any major changes being made to the draft text.
As such Belgium has now joined the ranks of other countries that have introduced country-specific transfer pricing documentation requirements. Belgian taxpayers need to consider these provisions and start taking necessary steps and actions to prepare for these new requirements in due time.
For more information, contact a tax professional in Belgium with KPMG’s Global Transfer Pricing Services group:
Dirk Van Stappen | +32 3 821 19 18 | email@example.com
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