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Transfer Pricing Forum: June 2017

Transfer Pricing Forum: June 2017

Transfer Pricing Forum: June 2017

In the light of the BEPS project, high profile international court decisions and apparent trends in your own tax jurisdiction, how do you see the future of transfer pricing in your jurisdiction, and why?

 

1. Which tools of transfer pricing planning may be affected – for example, the shifting of intangibles, finance or risk?

Before the Base Erosion and Profit Shifting (BEPS) project began, Belgium already had some administrative practices (mainly applied by the more experienced inspectors of the Belgian transfer pricing audit cell) similar to those contemplated in the BEPS Actions relating to transfer pricing. However, the OECD final deliverables will certainly serve as a strong confirmation of what was being applied in the past by the Belgian tax authorities. Furthermore, it is anticipated that new topics and points of view will be developed following the BEPS reports.

The introduction of the transfer pricing documentation requirements has increased the number of transfer pricing audits and other measures to prevent tax abuse and combat tax fraud. For instance, in response to the OECD BEPS initiative, the Belgian tax authorities have implemented more exchanges of information and provided additional human resources dedicated to transfer pricing audits. Moreover, the Belgian tax authorities are now able to utilize an additional tool to enforce the existing rules, as they can potentially take a more aggressive approach during a transfer pricing audit.

The potential changes and challenges, arising in a Belgian post-BEPS era mainly relate to the following areas:

Group synergies, local savings and market characteristics

Synergy sharing concept

The synergy sharing concept is not entirely new in Belgium. The local practice, in accordance with the OECD guidance on synergies1 has indeed shown that where corporate synergies arising from ‘‘deliberate concerted group actions2 provide a member of a multinational group with material advantages, it is necessary to determine the nature of the advantage or disadvantage, the amount of the benefit or detriment provided, and how that benefit or detriment should be divided among members of the multinational group. Based on this statement, recent cases have seen com-mission fees paid to foreign related parties acting as procurement centers being challenged because they were considered too high.

When the ‘‘deliberate concerted action’’ criteria is met, the Belgian tax authorities are of the opinion that benefits arising from the synergies, that were created as a result of the concerted group action (e.g., creation of a centralized procurement center), should generally be shared by members of the group, in proportion to their own contribution to the creation of the synergy, after an appropriate remuneration is rewarded to the party coordinating the activities.

In the past a typical tax planning structure may have existed in the creation of an intermediary entity located in a tax-efficient jurisdiction that made a profit associated with the supply chain or procurement transactions. In a post-BEPS era, these ‘‘classic’’ supply chain structures will no longer have a future, unless the functionality and capabilities of the inter-mediary entity supports the (historic) allocation of the profits.

 

Location savings and market characteristics

In the past a typical tax planning structure may have existed in the creation of an intermediary entity located in a tax-efficient jurisdiction that made a profit associated with the supply chain or procurement transactions. In a post-BEPS era, these ‘‘classic’’ supply chain structures will no longer have a future, unless the functionality and capabilities of the inter-mediary entity supports the (historic) allocation of the profits.

The location savings concept is becoming increasingly important in developing countries and their view on the treatment of location savings will not necessarily align with the Belgian tax authority’s interpretation.

Intangibles

Economic approach vs legal approach and allocation of risk-adjusted / risk-free returns

Before BEPS, the Belgian tax authorities had already followed the view provided by the OECD guidance on intangibles3 which clarifies that legal ownership alone does not automatically generate a right to the return that is derived from the exploitation of an intangible asset.

As such, the legal ownership has served in past, and will serve in the future, as only a starting point to identify and analyze controlled transactions relating to intangibles and appropriate returns that reflect the value of the contribution.

In accordance with the arm’s length principle, the legal qualification has to be reassessed when defining the remuneration, after a deep functional analysis has been performed. The analysis should take into consideration not only the contribution made by a Belgian entity, but also the one made by the other multinational group members.

Furthermore, Belgium has fully supported the OECD position, as Belgian case law, where all or part of the ‘‘DEMPE’’ functions (i.e., Development, Enhancement, Maintenance, Protection, and Exploitation) are being performed by group members other than the legal owner, indicates that all or a substantial part of the return that is attributable to the intangible will be allocated to the parties actually performing these functions.4

 

Qualification of intangibles as hard to value and use of ex-post data

Hard-to-value intangibles are defined as ‘‘intangibles or rights in intangibles for which, at the time of their transfer between associated enterprises, (i) no reliable comparables exist; and (ii) at the time the transaction[s] was entered into, the projections of future cash flows or income expected to be derived from the transferred intangible, or the assumptions used in valuing the intangible are highly uncertain, making it difficult to predict the level of ultimate success of the intangible at the time of the transfer.’’5

In line with the OECD guidance with regard to hard-to-value intangibles, practical experience has shown that the Belgian tax authorities would challenge the pricing of intercompany trans-actions by using the ex post outcome as presumptive evidence of the appropriateness of ex ante pricing arrangements when a Belgian taxpayer cannot demonstrate that its pricing relies upon a thorough analysis and there is a large deviation between the forecasted data and the actual outcome. This principle is based on the fact that, under market conditions, independent parties would include a provision allowing the review of pricing based on actual outcomes.

Financing

In Belgium, over the past few years, increased attention has been paid to the transfer pricing aspects of intercompany financing transactions. As these transactions become more structured within multinational enterprises, and the experience of the Belgian tax authorities increases, the latter are likely to further increase the scrutiny of intercompany financing transactions and require more substantiation of the arm’s length nature of these transactions. The following trends in Belgium are worth considering while entering into intercompany transactions involving financing activities.

 

Loans

As intercompany agreements often represent the only transfer pricing documentation in place when it comes to intercompany financing, they are closely scrutinized by the Belgian tax authorities. For instance, the inclusion of a subordination clause when no other debt has been contracted by the company might be questionable, especially where the interest rate component has been increased in order to take into account this element. Furthermore, if a related party agreement provides for a short term loan which is renewed each year with a short term rate applied, the Belgian tax authorities may try to requalify the loan as a long term loan (if Belgium is the lender), demonstrating that, from the inception of the loan, parties knew that the short term loan would be renewed annually.

With respect to the credit rating determination, a relatively recent trend coming from the Belgian transfer pricing audit team is to adopt a credit rating methodology based on the group credit rating that is potentially subject to being marked down, rather than relying on the stand-alone credit rating approach.

Intercompany guarantee fee payments are also being challenged more frequently as compared to the past. In line with the approach taken by the Belgian transfer pricing audit team on the credit rating analysis, such guarantee fee payments are always scrutinized and subject to discussions. With the new Local File form that requires taxpayers to report the guarantee fees paid and received, these transactions will hardly go under the radar of the Belgian tax authorities.

 

Cash pooling

In the context of cash pooling arrangements, an important point of attention concerns the conversion of short term deposits or loans into long term arrangements. Certainly, in cases where a high amount of cash is deposited by a cash pool participant and there are limited fluctuations in the amounts deposited, it might be argued that the deposit is actually a long term deposit or a long term loan. Therefore, there is a risk of having the cash pooling arrangements re-characterized into a long term loan arrangements, which will result in the application of higher interest rates.

With respect to the creation of synergies in a cash pooling arrangements, it remains to be seen what the viewpoint of the Belgian tax authorities will be. Currently the Belgian tax authorities are still allowing the related party cash pooling leader, acting as the in-house bank, to retain the majority of the synergies generated.

 

Passive association and implicit support

According to the OECD Guidelines, as modified by the final reports in the context of the BEPS project6 Belgian practice has been that no entity should be charged for receiving indirect benefits or benefits arising from passive association. As such, with respect to Belgium, one should assess whether a particular Belgian entity derives its benefits solely from its status as a member of a controlled group or from an active promotion of the group’s attributes that positively enhances its profit-making potential. For instance, in the context of financial transactions, according to the Belgian practice, no service is deemed to be received where a Belgian enterprise, by reason of its affiliation alone, has a credit-rating higher than it would be if it was unaffiliated. Conversely, an intra-group service would usually be deemed to exist when the higher credit rating was due to a formal guarantee provided by another group member, or where the enterprise benefitted from any other deliberate, concerted actions. Whereas Belgian companies are more often in a borrowing situation, the Belgian tax authorities have tried to maximize the benefit of the implicit guarantee, which requires no payment. Reference is also made by the Belgian tax authorities to the report issued by Standard & Poor’s7 which supports this viewpoint.

As a general remark and in addition to the Belgian features listed above, it is worth mentioning that developing countries have assumed a significant role in the current global economic environment, as MNEs have been relocating parts of their global supply chain. Given that transfer pricing is projected to become an ever increasing international and sometimes controversial issue, and given that it is currently a priority in developing countries, seeing how these countries tackle their local transfer pricing issues is of great importance since it will ultimately have an impact on an overall MNEs’ structure. Develop-ing countries, indeed, have become increasingly sensitive to the topic, in response to the risk of losing tax revenues from cross-border transactions carried out by MNEs. In this respect, the ‘‘Practical manual on transfer pricing for developing countries’’ issued by the United Nations has stressed the importance of developing internationally shared principles to help each country fight abusive transfers of profit abroad, while at the same time limiting the risk of double taxation of those profits, which seems to be the core message of the arm’s length principle.

 

2. Could there be more interest in ensuring that there is sufficient substance to match the contractual roles of group companies?

Aligning profits from controlled transactions with commercial reality and economic substance has been one of the core drivers of the OECD BEPS project. Belgium has fully endorsed the provision contained in the revised Chapter I of the OECD Transfer Pricing Guidelines and, in the future, focus will be given to the economically significant characteristics.

The Belgian tax authorities would most likely require a careful delineation of the actual transaction between the associated enterprises by analyzing the contractual relations between the parties in combination with the conduct of the parties. The conduct will supplement or replace the contractual arrangements if the contracts are incomplete or are not supported by the conduct. Additionally, the proper application of pricing methods in a way that prevents the allocation of profits to locations where no contributions are made, will lead to the allocation of the profits to the enterprise that has conducted the corresponding business activities. In circumstances where the transaction between associated enterprises lacks commercial rationality, the Belgian tax authorities will challenge the arrangement for transfer pricing purposes. This is a result of the need to recognize profits which are aligned with economic sub-stance.

Although in the past the focus in transfer pricing has been transaction-based (e.g. the pricing of single intercompany transactions), the current emphasis has been put on the sub-stance of the various group entities taking part to the global value chain. As part of Belgium’s response to OECD BEPS Action 13, it is now required that MNEs prepare and file Country-by-Country Reporting, if certain conditions are met. The latter is clearly designed to bring greater transparency to a MNE’s activities, thereby allowing Belgian tax authorities to improve their audit focus and risk assessment. Many MNEs are currently assessing how their figures will be reported and are considering whether changes to how they are structured should be made.

 

3. In which ways might the burden of transfer pricing documentation change, for example by the inclusion of global value chain analyses or a review of the financial transactions of the group?

In line with the guidance provided by the OECD BEPS Action 13, Belgium has introduced transfer pricing documentation requirements through the Program Law of July 1, 2016 and the related Royal Decree dated October 28, 2016. The new requirements will be applicable to accounting years starting on or after January 1, 2016.

By doing so, Belgium has made an important step forward (potentially even ‘a bridge too far’ as the Belgian Local File should contain very detailed, mainly quantitative information that will result in a significant compliance burden for business without necessarily providing useful insights to the Belgian tax authorities), moving from an era where no transfer pricing documentation was being required, unless requested in the context of a tax audit, to a formal transfer pricing documentation obligation which includes the electronic filing of detailed forms.

The new requirements have largely increased and expanded the documentation burden on Belgian taxpayers, by adopting the OECD transfer pricing structure, i.e., three layers of documentation consisting of:

  • Country by Country Reporting;
  • Master File; and
  • Local File.

 

Taken together, these three documents require taxpayers to articulate consistent transfer pricing positions. The three re-ports, which need to be compiled in a specific format, will, where applicable, have to be filed annually and will need to be filed electronically. An electronic platform for the filing is currently being built.

In accordance with the items foreseen by the OECD Action 13 to be included in the Master File, the Belgian transfer pricing legislation requires taxpayers to include the nature of its global business operations and the global allocation of income and economic activity, in order to align taxation with economic activities and value creation. In addition, a specific level of in-formation on the MNE intangibles and the intercompany financing activities need to be disclosed.

In the past, transfer pricing documentation had mainly a national and bilateral focus in Belgium, except for the MNE legal and organizational structure. Indeed, local subsidiaries and permanent establishments were typically required to disclose information on the local entity and, to a certain extent, on other parties to the transactions and dealings. With the new legislation in force, the gap between the one-sided approach and the global approach, of providing information on the activities carried out by MNEs, needs to be closed. In doing so, the compliance burden and costs for taxpayers may be substantial.

Given the new transfer pricing documentation requirements, the Master File will most likely be prepared by the parent or ultimate holding company and then be filed locally by the various subsidiaries or permanent establishments. While it is not desirable from a taxpayer perspective to have different Master Files within the same group, the Master File provided in local juris-dictions should also be relevant to the local entities. Therefore, additional compliance burdens and related costs may arise for joint ventures, as each joint venture will be required to file a separate master file for each partner, and for those entities whom activities are not fully or entirely covered by the group Master File, which will need to be ‘‘localized’’ to comply with local requirements.

The Belgian requirement to report intercompany financing activities in the framework of the Master File is not surprising, as recent experience has shown that recurrent transfer pricing controversies include intercompany financing transactions, which have become a clear focus area in Belgium. The Local File also requires a detailed reporting of the intercompany financing transactions entered into by entities in Belgium, including supporting documentation for the arm’s length nature of the prices applied and an overview of payments made by the local entity – for example, interest payments on cash pooling and guarantee fees – and to which jurisdiction such payments are made. The impact that such requirements will have on tax-payers will be taxpayer-specific. Indeed, while some of them al-ready have sound transfer pricing documentation and analyses in place with regard to intercompany financing transactions, others will need to assess whether the intragroup financing transactions entered into are subject to a coherent transfer pricing policy or structured approach. This is also due to the fact that, in the past, the only compliance exercise performed in this area mainly consisted of drafting intercompany agreements with no further documentation and analysis.

With respect to the Local File, the corresponding form re-quires Belgian entities to disclose certain items not only for the first assessment year’s results, but also the relevant information regarding the two previous years. As companies are usually selected for a transfer pricing audit on the basis of data-mining by the Belgian tax authorities regarding elements such as fluctuation and deviation of profit margins, the disclosure of the past years will make these fluctuations even more visible in the submitted Local File. This will likely contribute to the continuing increase in the number of transfer pricing audits in Belgium.

Timing can also be seen as an additional burden placed on Belgian taxpayers. In the past the Belgian tax authorities required transfer pricing information as of the time of a transfer pricing audit, giving a certain amount of time for taxpayers to respond to specific requests. However, starting in assessment year 2016, taxpayers meeting the relevant thresholds will have to comply with the new filing deadlines for the Master File, Local File and Country-by-Country Reporting. This approach may set difficulties in providing the right information to the tax authorities at the right time. Remarkably, the Local File will in principle need to be filed before filing of the Master File.8 Indeed, one would typically expect to first, or concurrently, file the Master File, which offers the bigger picture of the MNE, and then subsequently file the Local File.

However, the additional and detailed documentation requirements should not come as a surprise since, as confirmed by the OECD Action 13 itself, the Master file and Local file are, amongst others, to be used for risk assessment purposes and to provide information where the tax authority considers an audit to be necessary. In closing, it is worth mentioning that it re-mains to be seen how the Belgian tax authorities will absorb the huge inflow of new information.

 

4. How might the focus of domestic transfer pricing disputes change – for example, might they tend to be resolved more by reference to global value chain analyses, where risk decisions are taken or the commercial rationality of arrangements?

The focus of domestic transfer pricing disputes will surely rely on all three elements, i.e., global value chain, allocation of risks and commercial rationality. It is worth mentioning that this approach has been followed previously by the Belgian tax authorities (or at least by the more experienced inspectors of the Belgian transfer pricing audit team) and the above mentioned principles do not constitute a new approach to be taken by the Belgium tax authorities. The final deliverables of the OECD BEPS project will rather endorse and support the approach taken by the Belgian tax authorities.

At the heart of this approach, the following questions can be identified, and will help assess whether the taxation is aligned with the economic activities and the value creation.

  • Do returns accrue to an entity solely because it has only contractually assumed risks or provided risk free capital where no functionality was performed?
  • Does the actual transaction have commercial rationality?

 

The global value chain disclosure and the Country-by-Country Reporting will certainly act as a risk assessment tool in the hands of the Belgian tax authorities.

Furthermore, if a transaction lacks the commercial rationality of an arrangement that would have been agreed to by unrelated parties, the Belgian tax authorities will most likely try to challenge the transaction. However, the Belgian tax authorities should also consider the fact that if a transaction is not observed between unrelated parties, there will not be sufficient grounds for not recognizing the transaction.

With respect to intercompany financing, it is important not to analyze an intercompany financial transaction on a stand-alone basis, but to take into account the broader financing structure of the transaction. However one specific intercompany financing transaction might appear to be at arm’s length. Indeed, when analyzing the total structure further, a negative range might be retained at the level of a Belgian company, which could potentially be considered not at arm’s length. The business purpose, when contracting intercompany debt, is also becoming an important issue of controversy. On a commercial rationality level, the Belgian tax authorities might challenge the fact that a Belgian entity enters an intercompany lending arrangement as a borrowing party, when provided with a relevant level of cash and equity.

High importance has also been given to risk management and risk control, which should be a crucial part of the functional analysis. For transaction involving intangibles, it will become crucial to distinguish between the financial risks that are linked to funding associated with developing new intangibles and the operational risks (the financial capacity to manage and control the risks) linked to the activities for which the funding is used. The OECD guidance provides that mere funding of the DEMPE functions of an intangible by an entity, without performing any of the important functions in relation to the intangible, and without exercising control over the financial risk, will entitle the entity only to a risk-free return. For in-stance, in the case of an internally developed intangible, where the legal owner performs no relevant functions, nor uses relevant assets, nor assumes relevant risks, the legal owner will not ultimately be entitled to any portion of the return derived by the multinational group from the exploitation of the intangible other than arm’s length compensation, if any, for holding the title. This will enable the Belgian tax authorities to make transfer pricing adjustments more easily based on the transfer pricing related provisions included in the Belgian Income Tax Code (‘‘BITC’’), instead of having to use the general anti-abuse provision (Article 344 BITC), which appears more difficult to apply in practice.

 

5. Is your jurisdiction signing the MLI? How might the resolution of MAP matters involving your jurisdiction change?

Belgium has been one of over 100 jurisdictions included in the negotiation of the Multilateral Convention (‘‘Multilateral Instrument’’ or ‘‘MLI’’) that is intended to implement certain tax treaty related aspects of the OECD / G20 BEPS initiative. As such, on June 7, 2017, Belgium signed the MLI during the ceremony held by the OECD in Paris.

The BEPS actions covered by the Convention consist of:

  • BEPS Action 2: Hybrid Mismatch Arrangements;
  • BEPS Action 6: Treaty abuse;
  • BEPS Action 7: Avoidance of Permanent Establishment Status; and
  • BEPS Action 14: Improving Dispute Resolution.

 

Minimum standards have been foreseen for the prevention of Treaty Abuse under Action 6 and the Improvement of Dispute Resolution under Action 4.

As the Convention is designed as a mechanism to allow governments to align their treaties with the aspects of the BEPS project listed above, instead of renegotiating individual treaties, the OECD anticipates that up to 2000 treaties could be amended by the MLI.

At the date of the signature, Belgium provided two different lists; the first containing the 98 tax treaties to be revised through the MLI, and the second one concerning the reservations and notifications with respect to the different provisions of the MLI. The final positions will be notified to the OECD, who will act as the depositary of the MLI, upon the deposit of the MLI ratification.

With respect to the dispute resolution mechanisms, in view of Article 16 of the MLI, countries are required to include in their tax treaties the provisions regarding the MAP under Article 25, paragraphs 1 to 3, of the OECD Model Tax Convention. While many countries have agreed to minimum standards and a peer review monitoring system, Belgium has committed to provide for mandatory binding MAP arbitration in its bilateral tax treaties as a mechanism to guarantee that treaty-related disputes will be resolved within a specified time frame.

In a rapidly changing international tax landscape, the above is to be seen as the willingness of the Belgian tax authorities to help improving the business environment and help taxpayers avoid double taxation. The tool, however, should be read together with other similar initiatives, e.g., the Arbitration Convention and the proposed EU Council Directive on Double Taxation Dispute Resolution Mechanisms.

It is generally agreed that the MLI represents an important achievement as it will likely result in more certainty and predictability for businesses, and a better functioning international tax system that benefits the taxpayers. However, whether this will become reality remains to be seen, in particular given the opportunities under the Convention to make reservations and choose options. The MLI, nevertheless, only represents the first step in the process; the Convention still needs to be ratified, and certain jurisdictions still need to specify which treaties it will apply to. It should also be noted that the MLI is a complex instrument, divided into seven parts, and it will not directly amend the text of the various existing tax treaties, but instead will be applied alongside existing treaties, to modify the treaties’ application. As such, its reading and application may not be immediate to taxpayers and practitioners, as the various tax treaties will have to be read along with the corresponding MLIs, including the options and reservations made by each jurisdiction, leading to a cost and time consuming exercise.

 

6. Could there be more or less interest in APAs in your jurisdiction?

An advance pricing arrangement (APA) is an arrangement that determines, in advance of controlled transactions, an appropriate set of criteria (e.g., method, critical assumptions as to future events, etc.) for the determination of the transfer pricing associated with the transaction over a fixed period of time. APAs are intended to supplement the traditional administrative, judicial, and treaty mechanisms for resolving transfer pricing issues.9 Given the above, concluding formal agreements with the tax authorities offers significant advantages to multinationals by helping to reduce uncertainty, avoid controversy (thereby lowering related audit compliance costs) and mitigate the risk of double taxation. In Belgium, taxpayers can file an APA request with the Office for Advance Decisions in Tax Matters (‘‘Ruling Commission’’) for unilateral APAs and the General Administration of Taxation of the Department of Inter-national Affairs for bilateral and multilateral APAs. APAs are available under Belgian’s domestic law as of June 21, 2004. As of January 1, 2005, a new ruling regime allows for bilateral APAs, under the mutual agreement procedure (‘‘MAP’’) of the applicable double tax treaties.

Recently, at the international level, there has been, an ever in-creasing awareness that an effective tool in combatting tax evasion and tax avoidance is the automatic exchange of information between tax authorities. While in the past the ex-change of information on request was deemed to be a sufficient mechanism to ensure a certain level of transparency in tax matters, the existence of global businesses operating in a border-less and digitized world has shown the need to identify innovative initiatives.

On January 3, 2017, the European Commission has entered into force new rules to ensure that Member States have all the information they need on tax rulings concerning multinational companies in other EU countries. As of 1 January 2017, Member States are obliged to automatically exchange information on all new cross-border tax rulings that they issue. This will be done through a central depository, accessible to all EU countries.

A key element of the new EU mechanism is that the exchange of ruling information is no longer left to specific requests or spontaneous exchange, but is brought into the scope of automatic exchange, which is defined by the Directive as ‘‘systematic communication of predefined information to another Member State, without prior request, at pre-established intervals.’’ The concept of automatism essentially excludes any discretion for the Member State issuing the tax ruling. Obligations are, therefore, stricter than those under the existing income tax treaties.10

Despite the recent negative press concerning tax rulings and advance pricing agreements resulting from the European Com-mission’s state aid investigations and ‘‘Lux leaks,’’ APAs will continue to keep their attractiveness as a tool of obtaining legal certainty and avoiding future disputes. However, it is important to make a distinction between unilateral and bilateral or multi-lateral APAs. In this respect, the automatic exchange of tax rulings and APAs might push taxpayers into requesting bilateral or multilateral APAs rather than limiting the legal certainty to only one jurisdiction, while the other jurisdictions affected by the agreement would still be able to have full overview of the agreement reached on a unilateral level. Another element which could potentially have an impact on the taxpayers’ appetite for APAs consist in the fact that Belgium has always been a country on the front line with regard to exchanging information, in terms of quantity and quality, while the same approach has not always been followed by other jurisdictions. This has generated a discrepancy between the information provided and received.

 

Dirk Van Stappen, Yves de Groote and Eugena Molla

Original Source: Bloomberg tax

Footnotes:

1 OECD BEPS Actions 8-10, Aligning Transfer Pricing Outcomes with Value Creation, paragraphs 1.157-1.162.

2 Ibid, paragraph 1.159.

3 OECD BEPS Actions 8-10, Aligning Transfer Pricing Outcomes with Value Creation, Intangibles, Section B, October 2015.

4 Ibid, paragraph 6.48.

5 Ibid, paragraph 6.189.

6 Ibid, paragraph 7.12.

7 Standard & Poor’s, General Criteria: Group Rating Methodology, November 2013.

8 The Local File should in principle be filed at the same time as the filing of the corporate income tax return. The filing due date corresponds therefore to the filing date of the corporate income tax return. The Master File has to be filed with the Belgian tax authorities within a period of 12 months after the close of the reporting of the group.

9 OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations, paragraphs 4.123 – 4.138.

10 Van Stappen D., Oepen W., Molla E., Mandatory Automatic Ex-change of Information on Tax Rulings: Political Agreement Reached in ECOFIN Council, Internal Transfer Pricing Journal, January/February 2016.

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