As in 2013, the Belgian tax administration and its Transfer Pricing (TP) Unit
will use the first few months of the new year to send a standard TP
questionnaire to approximately 300 Belgian companies and branches. A new
wave of TP audits is thereby launched.
The TP Unit, established in 2006 as a specialized group within the Belgian tax
administration, continues thereby its increased audit activity following the
expansion of its team with regional tax inspectors.
The companies and branches that will receive a TP questionnaire are
selected through a data mining system that screens the taxpayers' financial
statements and other available information for "red flags". The TP
questionnaire may be viewed as the start of an in-depth transfer pricing audit.
Both foreign-owned companies active in Belgium and Belgian multinationals
can expect to receive a TP questionnaire. However, small or medium sized
companies with intercompany transactions may also have been selected. To
our knowledge, this new wave of audits does not focus on any specific
industry or type of company.
The standard TP questionnaire, which is expected to be sent out by the end of
January or the beginning of February, is similar to the one used by the TP Unit
The questionnaire requests information regarding:
the taxpayer's position within the group, including consolidated
accounts and corporate charts;
the intercompany transactions in which the Belgian entities of the
group are involved, including information on the different related
counterparties and their internal structure and organisation;
the economic role of the Belgian entity, including supply chain
information and detailed financial information per business unit;
comparability analyses, including information on the functions, risks
and assets of the Belgian entities, the contracts in place, the relevant
economic circumstances and company strategies;
intangibles owned and license agreements;
cost contribution agreements, advance pricing agreements (APAs)
and tax rulings in place;
profit allocation between head office and permanent establishments;
the transfer pricing methods used and transfer pricing documentation
in place.2 New Wave of Belgian Transfer Pricing Audits
In principle, taxpayers must provide the tax administration with their input on
the TP questionnaire within a one month period. Extensions of this deadline
can, however, be obtained.
In addition thereto, the TP Unit encourages taxpayers to have a pre-audit
meeting in order to narrow down the scope of the TP audit and to identify the
most relevant information to be provided.
Such a pre-audit meeting may save considerable time and efforts on the
taxpayers’ part, as not all questions of the standard TP questionnaire will be
equally relevant to one’s particular situation.
How to be prepared
Given the rather tight timeframe and the fact that the TP audit might coincide
with busy periods of the year, taxpayers may want to prepare themselves for a
possible audit by collecting all relevant documents, agreements and other
data in order to build a TP file which can be used as the basis for the TP audit
or the pre-audit meeting.
Even when not selected this time, such a TP file is always good to have on
the shelf in order to be prepared for any TP related question that might be
raised by the tax administration in the context of an audit or otherwise.
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