Base erosion and profit shifting (BEPS) and transfer pricing (TP) regulations impose new reporting requirements

Last year Panis informed you about the implementation of the new Belgian law regarding transfer pricing.

Meanwhile the Belgian Government has issued the final forms and filing instructions.

The filing will have a significant impact on the workload for companies which are part of an international group. Depending on your structure, up to three reporting forms are applicable.

If your company is a Belgian ultimate parent entity of a multinational group with a gross consolidated group revenue of at least 750 million EUR, it should file a Country-by-Country Report. The Belgian entity may also be required to file this form in a number of other cases, e.g., if there is no agreement for exchange of information in tax matters between Belgium and the reporting entity’s country.

The Country-by-Country report contains key information of the final statements for every member of the group by jurisdiction, It provides the local tax authorities information about the revenue, income tax paid and accrued, employment, capital, retained earnings, tangible assets and activities.

If your Belgian company exceeds at least one of the following thresholds, it needs to submit a Master File and a Local File:

  • operational and financial revenue of at least 50 million euros;
  • balance sheet total of 1 billion euros;
  • annual average number of employees of 100 full-time equivalents.

The Master file contains key information about the group’s global operations including a high-level overview of the company’s business operations along with important information on the company’s global transfer pricing policies with respect to intangible assets and financing.

The Local file contains information and support of the inter-company transactions that the local company is engaged in with related parties.

Thus the requested information is very broad , ranging from general information on the local entity up to detailed quantitative information on inter-company transactions and relations such as; management structure, shareholders, inter-company financing, …

The law also establishes specific TP documentation penalties, for non-compliance (late, incomplete, or no filing) with the new TP documentation requirements. Non-compliance is also likely to increase the risk of a tax audit.

Moreover the deadline for the Local File form is the date by which your company is filing the company tax declaration, meaning that the due date, for companies with an accounting year ending 31 December 2016, will be September 30th 2017. It is necessary to start preparing the needed documents as soon as possible, as collecting and structuring the information can be very time consuming.

As your partner in the diamond business Panis would be pleased to provide you the necessary support in order to create a correct and timely reporting.

Please feel free to contact Panis in order to start with the preparation of the reporting on time.