The corporate tax and transfer pricing compliance deadline for many Belgian taxpayers is typically toward the end of September (i.e., for companies with financial years ending in December). However, this year, in light of the current coronavirus (COVID-19) pandemic situation, the filing deadline for the Assessment Year 2020 (AY 2020) has been extended until 29 October 2020.
For transfer pricing compliance, companies meeting the thresholds will have to file their Local file (form 275LF) on the MyMinfin platform (in XML), similar to prior years. To clarify various aspects of the transfer pricing filings and requirements, the Belgian tax authorities published additional guidance (Circular (June 2020)) setting out another list of “frequently asked questions” (FAQs) at the end of June 2020.
One of the key points covered in the FAQs is that the Belgian tax authorities expect a comparability and functional analysis performed in line with the Organisation for Economic Co-operation and Development (OECD) Action 13 requirements to be maintained at the time of filing the Local file. Consequently, in order for a taxpayer to indicate that a “transfer pricing study” is available (under Section B10 of the Local file form 275LF), the Local file report (per Action 13)—or at least the key aspects of such documentation, comprising the functional analysis and comparability analysis—must have been prepared.
Prior to the publication of the FAQs, some taxpayers had interpreted “transfer pricing study” to mean the (sole) availability of comparability/benchmarking studies. This is an aspect that taxpayers need to review when completing the Local file form for FY 2019 (AY 2020).
The FAQs also clarify the following:
As a response to the economic situation resulting from the coronavirus (COVID-19) pandemic, a loss carry-back regime has been introduced in Belgium. The regime stipulates that companies in a taxpaying position in FY 2019, but expecting a loss in FY 2020, may be able to apply the loss carry-back which is intended to allow companies to get a quicker refund of tax prepayments or to pay less taxes for AY 2020.
Consequently, groups that may be considering a review of their transfer pricing policies in FY 2020 will need to consider whether and how the loss carryback regime will affect the Belgian taxable base. Examples include:
Between now and the end of October 2020, Belgian taxpayers will need to consider various aspects ahead of the corporate tax and transfer pricing compliance deadline.
Read a September 2020 report prepared by the KPMG member firm in Belgium
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