New Circular on the Belgian statutory transfer pricing reporting and BEPS13 Forms
On June 30, 2020, the Belgian tax administration published a transfer pricing “circular” (‘’Circulaire 2020/C/88 FAQ betreffende BEPS13’’/’’Circulaire 2020/C/88 FAQ relative à BEPS13’’ NL / FR) setting out the Belgian tax administration’s commentaries on selected topics or questions arising with taxpayers when preparing their statutory transfer pricing reporting. In this respect, reference is made to the Belgian taxpayers’ obligation to prepare and file the transfer pricing notification Forms (275 CBC NOT); Master File (275 MF, Master File); Local file (275 LF, Local File); Country by Country Reporting (275 CBC, Country by Country Reporting) as implemented in Belgian tax law based on the OECD’s BEPS Action 13.
Consistency with general practice and interpretations of applicable legislation and recent practices
The circular provides for an updated list of commentaries previously published by the tax administration (previous FAQ version published in May 2018) and generally appears to be aligned with the common approaches followed by professionals in tax practice and OECD guidance. The new circular also provides further useful insight and clarity on selected topics and addresses specific questions on when to prepare, how to interpret and complete the BEPS 13 forms in particular cases.
Major topics addressed by the circular include:
- Obligation to file, deadlines and thresholds;
- Reporting obligations for a consortium, joint venture and partnership;
- Reporting obligations for non-profit organizations;
- Reporting obligations for permanent establishments;
- Selected questions related to credit institutions and insurance companies; and
- Specific guidance on the content, details and format of the information to be presented in the forms.
While the circular confirms general approaches and includes some elements already commented upon by the tax administration before, some additional items are also interesting and worth highlighting.
The circular states that non-profit organizations, although not subject to corporate tax, are obliged to prepare and file Belgian BEPS13 forms (in case the relevant thresholds are exceeded).
The section on the permanent establishments confirms that both the activities and the transactions of the head office and the permanent establishment(s) are to be reported in the Local File Form (if relevant thresholds are exceeded), as these ‘dealings’ are also cross-border transactions. Some questions related to the business restructurings are separately addressed by the circular. The tax administration confirms that only the restructurings involving the Belgian entity are subject to the reporting, while the reorganizations of the organizational or shareholding structure beyond the Belgian entity are not to be mentioned in the reporting. At the same time, reference is made to the fact that not only legal restructurings are to be reflected in the reporting, but also operational and functional changes (i.e. changes in functional profile) if these are “business restructurings” as defined in the OECD TP Guidelines.
The circular further provides quite detailed guidance on completion of particular sections of the forms and addresses specific questions that might arise in the process of compiling and filling the information subject to the disclosure in the reporting.
Although the Belgian transfer pricing reporting requirements have already been in place since 2016, a number of questions remained open and subject to interpretation. The new circular provides for an important number of tax administration’s positions and interpretations on rather specific and case-by-case topics. The circular is the next step of the tax administration in providing more clarity and transparency over the compliance process and assisting the taxpayers in meeting their BEPS 13 compliance obligations.