Use the Lexology Navigator tool to compare the answers in this article with those from other jurisdictions.
Advance pricing agreements
Availability and eligibility
Are advance pricing agreements with the tax authorities in your jurisdiction possible? If so, what form do they typically take (eg, unilateral, bilateral or multilateral) and what enterprises and transactions can they cover?
Taxpayers that wish to obtain certainty in advance and avoid potential transfer pricing disputes may obtain advance pricing agreements (APAs). Unilateral APAs can be obtained from the Belgian Service for Advance Decisions (Ruling Commission), which is a dedicated central and autonomous service within the Federal Ministry of Finance and independent from the Belgian Tax Authority (BTA).
Unilateral APAs in transfer pricing matters deal with the arm’s-length character of a given price or remuneration based on:
- the functions performed;
- the risks assumed; and
- the assets used.
APAs typically require a transfer pricing study that includes a functional analysis, a description of the methods used and a comparability analysis. Under certain circumstances, a limited transfer pricing report can suffice. The Ruling Commission generally has a cooperative attitude towards the taxpayer. Bilateral or multilateral APAs can be obtained through the Department of International Conventions.
Unilateral, bilateral or multilateral APAs may cover any (interpretative) issues regarding transfer pricing or the attribution of profits to permanent establishments. In this way, all transactions and entities subject to transfer pricing rules can be covered by APAs.
Rules and procedures
What rules and procedures apply to advance pricing agreements?
A unilateral, bilateral or multilateral APA must be requested in writing (via registered mail, regular mail or email) from the Ruling Commission and the Department of International Conventions, respectively, either by the company concerned or by proxy (eg, a lawyer). The request must be drafted in Dutch, French or German and filed before the envisaged transactions have been carried out or produced any effects.
For practical reasons, the bilateral or multilateral APAs can enter into force as of the first day of the financial year – even if transactions took place between the first day of the financial year and the date of submission – provided that the application is submitted by the last day of that financial year. When the relevant facts and circumstances are identical to those in previous tax years, the taxpayer can ask for a roll-back. In such cases, the outcome of the bilateral or multilateral APA can also be applied for the previous years. Roll-back is available only if the applicable time limits (eg, the tax assessment terms) allow it.
The request must include the following information (in English, Dutch, French or German):
- the identity of all parties and a description of the group and its activities;
- the APA’s lifespan;
- a description of any intercompany transactions;
- details of the transfer pricing method used (if any);
- a comparability study (if available);
- a functional analysis;
- unilateral rulings obtained by the group (if available)
- the proxy of the person who filed the request (if available);
- financial information regarding the company concerned; and
- references to the applicable legal provisions at hand.
A subsequent request to renew the APA must be filed at least six months before the expiration of the existing one.
How long does it typically take to conclude an advance pricing agreement?
Unilateral APAs are generally obtained within three to six months, provided that all required information has been submitted on time.
Concluding a bilateral or multilateral APA takes approximately one year from when the competent authorities concerned avail of all relevant information, where it concerns a relatively simple case. However, this is usually prolonged to two to three years when cases are more complex.
What is the typical duration of an advance pricing agreement?
In general, APAs are valid for a maximum of five years.
What fees apply to requests for advance pricing agreements?
The filing of a unilateral, bilateral or multilateral APA is free of charge in Belgium.
Are there any special considerations or issues specific to your jurisdiction that parties should bear in mind when seeking to conclude an advance pricing agreement (including any particular advantages and disadvantages)?
As of 2017, APAs are exchanged with the other jurisdictions involved, which mutually exchange ruling decisions with Belgium.
Click here to view the full article.