Transfer Pricing documentation in Belgium

Belgium does not have formal transfer pricing documentation requirements. However, the Belgian government has endorsed the principles laid down in the EU Code of Conduct.
In practice this means that preparing documents up front has become the best advice for meeting the often short deadlines for providing documentation in the case of an audit and also to avoid administrative fines and penalties.

In June 2006, the Council of the European Union adopted a Code of Conduct for transfer pricing documentation for associated enterprises in the EU (EUTPD). This is aimed at simplifying transfer pricing for cross-border activities within the EU. The Code of Conduct is a political commitment made by EU member states. It provides that the EU member states should:

• not impose unreasonable costs or administrative burdens on enterprises when requesting for documentation;
• not request documentation that has no bearing on transactions under review; and
• ensure that there is no public disclosure of confidential information contained in the documentation.

A multinational group’s standardised, consistent EUTPD consists of two main parts: the masterfile  and country-specific information. The masterfile contains standardised information relevant for all the EU group members and should follow the economic reality of the business, providing a “blueprint” of the group and its transfer pricing system. The country-specific documentation supplements the masterfile and contains a detailed description of the business and the business strategy, information on country-specific controlled transactions, a comparability analysis, motivation for the choice for a specific transfer pricing method, and a description of implementation of the group’s inter-company transfer pricing policy.

The EUTPD concept allows companies to respond efficiently to enquiries from local tax authorities. In preparing documentation, companies can easily identify potential transfer pricing pitfalls and planning opportunities. EUTPD is also an excellent way to provide an intermediary level of documentation between globally centralised and locally centralised documentation, since it allows multinational groups to capture similarities in market and function that might exist at an integrated European level.