The Royal Decree of 16 June 2024, published in the Belgian Official Gazette on 15 July 2024, introduces modifications to the transfer pricing forms 275.MF, 275.LF and 275.CBC NOT. This royal decree replaces the royalty decree of 28 October 2016 and will be applicable for financial years starting on or after 1 January, 2025.

 

Following Action 13 of the OECD BEPS project, Belgium introduced mandatory transfer pricing forms applicable as of January 1, 2016. Each Taxpayer exceeding in its their statutory financial accounts one of the following thresholds in the preceding financial year had to file form 275.MF and 275LF:

• Total operating and financial revenues equal to or exceeding EUR 50 million (excluding non-recurring items);
• Balance sheet total equal to or exceeding EUR 1 billion;
• Average annual number of employees of 100 in full-time equivalents (FTEs).

Moreover, a Belgian entity of a qualifying multinational group (groups with a consolidated group revenue equal to or above EUR 750 million) should file a country-by-country notification form (275.CBC.NOT) indicating whether or not the Belgian entity is the ultimate parent company, the surrogate parent company or a regular Belgian constituent entity and indicating which group entity will file the Country-by-Country report.

With the new Royal Decree, Belgium introduced some changes to the forms.  The changes are inspired by insights gained by the Belgian tax authorities since the introduction of the forms in 2016 and the additional guidance contained in the 2022 OECD Transfer Pricing Guidelines (specially on hard-to-value intangibles and financial transactions).

The Master file form (275.MF) will remain unchanged, but the explanatory notes include several new elements. With regard to the description of business activities (box II), it is now necessary to include a more comprehensive description of the analytical framework for the value chain and a functional analysis of the group. This is to be done in four steps: (i) identify the ‘value drivers’, (ii) make a functional analysis of key functions, risks and assets, (iii) allocate profit to entities according to value creation by primary function and (iv) compare with transfer pricing results. With regard to intangible assets (box III), a more comprehensive description of DEMPE functions will be necessary. In addition to a list of intangible assets within the group (indicating the group entity that is the legal owner), it will also be required to indicate which group entities perform a DEMPE function in relation to these assets. Furthermore, a list of intangible assets transferred or used that are difficult to value must be provided. Finally, the following points should be defined when discussing financing arrangements between related entities (Box IV): the principles for establishing commercial or financial relationships on financial transactions, the determination of the market conditions of treasury activities (including intercompany loans, cash pooling and hedging), the treatment of financial guarantees and the analysis of in-house (re)insurance.

The Local file form (275.LF) remains similar compared to the previous form apart from the following changes:

• Part B (to be completed by taxpayers having cross border intercompany transactions exceeding EUR 1 million) should now include the intercompany transaction volumes per country and no longer on an integrated basis for all countries together – this is applicable for boxes B3, B4, B5 and B6
• In box B10 a tick-the-box should be done insofar a taxpayer has a transfer pricing methodology or principle and/or framework agreement or model contract and/or transfer pricing study available. These documents did not have to be added to the form 275.LF; As of 2025, such documents will need to be added in a readable PDF (if the tick-the-box is done)
• Other additional information to be included:
  • Tax identification number of the entities concerned in boxes A6 (main competitors) and B11 (permanent establishments)
  • List of the relevant countries included in the Cost Contribution agreements, APAs, ruling and in-house (re)insurance policies should be disclosed

The new notification form (275.CBC.NOT) must clearly indicate the nature of the notification, specifying whether it is a first notification, an amendment to a previous notification, or a termination of the notification obligation.  It is now also required to file the new notification form in case of a termination of the notification obligation.

With the new Royal Decree, Belgium introduces adaptations to the forms 275.LF, 275.MF and 275.CBC.NOT. Therefore, for financial years starting on or after 1 January 2025, Belgian tax resident companies or establishments that are part of a multinational group must assess their existing Masterfile to ensure it includes the information listed in the explanatory notes and verify whether they have the documents available for which they have ticked-the-box in form 275.LF.

For any further questions or assistance, please do not hesitate to contact your trusted Tiberghien advisor. 

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 Authors : Tine Slaedts & Ive Braspenningx