Belgium publishes draft transfer pricing guidance for public comments

Belgium publishes draft transfer pricing guidance for public comments

By Bram Markey (Director, Transfer Pricing, PwC Belgium)

The Belgian tax authority has issued a draft Circular on the 2017 update to the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.

The draft Circular – published on November 9 – notes that the Belgian tax authority adheres to the principles of the 2017 OECD Transfer Pricing Guidelines and to the arm’s length principle.

The Circular provides an overview of the updated chapters of the OECD Transfer Pricing Guidelines, following BEPS Actions 8-10, on aligning transfer pricing outcomes with value creation, and briefly discusses:

  • The arm’s length principle (Chapter I);
  • The OECD-recognized transfer pricing methods (Chapter II – including the revised guidance on the profit split method, published in June 2018);
  • The comparability analysis (Chapter III);
  • The special considerations for intangibles (Chapter VI – including the guidance on hard-to-value intangibles);
  • The special considerations for intra-group services (Chapter VIII – including a discussion on low value-adding intra-group services);
  • The cost contribution arrangements (Chapter VIII); and
  • Transfer pricing aspects of business restructurings (Chapter IX).

The draft Circular briefly addresses issues relating to financial transactions (although no final OECD guidance has been published yet) and the basic principles on attributing profits to permanent establishments on the basis of the 2008 and 2010 Reports on the Authorized OECD Approach.

The draft Circular suggests how the Belgian tax authority would apply the 2017 OECD Transfer Pricing Guidelines.

Reference in this respect can be made to, particularly, the draft statements on a seven-year review period for hard-to-value intangibles, the treatment of government subsidies/incentives, qualification of costs as disbursements, remuneration for cash pool leaders and allocation of synergy benefits, remuneration for procurement activities, and stricter requirements for benchmarking.

The draft Circular would also implement and endorse the simplified approach for low value-adding services with a cost plus five percent being put forward.

Since the current positions as reflected throughout the paper may impact the existing transfer pricing practices of MNEs, we strongly recommend interested parties to act on the Belgian tax authority’s call and provide input on the draft Circular.

The deadline for submitting comments on the draft Circular closes on December 12, 2018.

Bram Markey discusses Belgian draft transfer pricing guidance issued for public comments

The author is Director, Transfer Pricing at PwC Belgium. He can be reached at or +32 9 268 83 48.