By Geoffroy Galéa, Laga (Deloitte Legal), Belgium; Laura Deroy, Deloitte, Belgium; and Florence Siccard, Deloitte, Belgium
Recently, new legislation was introduced in Belgium that decreases in the compliance burden related to the transfer pricing reporting obligations of multinational groups.
The new transfer pricing law, published in the Belgian Official Journal on 15 May, affects Belgian group entity country-by-country reporting notification requirements.
Background
According to Belgian law, multinational groups that have a consolidated revenue of EUR 750 million or more are required to draft a country-by-country report.
The country-by-country report is required to be filed in Belgium if the ultimate parent entity of the group is located in Belgium.
In addition, the country-by-country report is required to be filed in Belgium by a Belgian group entity if the ultimate parent entity of the group did not file a country-by-country report or if the jurisdiction in which the country-by-country report was filed does not exchange country-by-country reports with the Belgian tax authorities.
According to the new Belgian transfer pricing legislation, each Belgian group entity of a qualifying multinational group is required to file a country-by-country reporting notification with the Belgian tax authorities on an annual basis.
The country-by-country reporting notification identifies the group entity that will file the country-by-country report, which jurisdiction it will be filed, and whether such group entity is the ultimate parent entity or another group entity, i.e., a surrogate parent entity.
The country-by-country reporting notification should be filed with the Belgian tax authorities on the last day of the group’s reporting period.
In the event that the Belgian group entity does not comply with this documentation obligation, it risks a fine ranging from EUR 1,250 to EUR 25,000, although only applicable from the second offense onwards.
Belgium transfer pricing change
In the past, the country-by-country notification was required to be filed annually, by each of the group’s entities located in Belgium. This repetitive compliance burden was often considered as redundant by Belgian taxpayers. Hence, Belgian lawmakers decided to reduce this compliance burden.
To achieve that goal, the new section (§ 3) in article 321/3 of the Belgian Income Tax Code of 1992 provisions that the country by country reporting notification is only required to be filed if the information on the ultimate parent entity and reporting entity deviates from what was filed for the previous reporting period.
As such, the new addition to the law requires the country-by-country notification to be filed only when the notification threshold is first exceeded and when a change occurs in the information to be reported on the ultimate parent entity and reporting entity.
Notification may therefore be required when the ultimate parent entity or reporting entity changes its name or address or in the context of an acquisition or group reorganization whereby the ultimate parent or reporting entity changes.
This decrease in compliance burden will be applicable for reporting periods ending on or after 31 December 2019.
— Geoffroy Galéa is a tax lawyer with Laga (Deloitte Legal), Belgium
— Laura Deroy is a senior transfer pricing consultant with Deloitte, Belgium.
— Florence Siccard is a tax consultant with Deloitte, Belgium.
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