On 25 February 2020, the Belgian tax authorities published the final version of the transfer pricing (TP) Circular No. 2020/C/35 in French on their website on transfer pricing guidelines for multinational enterprises and tax administrations.

The TP Circular No. 2020/C/35 provides an overview of chapters 1, 2, 3, 6, 7, 8, and 9 of the OECD’s 2017 transfer pricing guidelines, which were amended to reflect the BEPS actions 8-10 final reports.

The circular provides two separate dates of entry into force. Most of the paragraphs are in accordance with the OECD TP guidelines 2017 and will apply to intercompany transactions as of 1 January 2018. However, the provisions listed below, and the recently published chapter 10 of the OECD TP guidelines on financial transactions are applicable to intercompany transactions as of 1 January 2020:

Para. 78: For comparability analysis, the tax authorities expect taxpayers to take into account at least 3 years of comparables, whereas only one year is examined for the tested party.

Para. 106: Regarding companies with a limited risk profile, the administration does not accept any company having experienced 2 or more loss-making years.

Para. 108: Unless the party tested itself is a start-up company may not be included in the set of comparables. The administration considers that companies that were created less than 4 years ago must remain out of consideration.

Para. 115: To improve comparability, the comparables search should be as close as possible to the year in which the tested party transaction under review took place.

Para. 116: The Belgian tax authorities expect taxpayers to update their TP studies every 3 years, unless the underlying facts and circumstances require an earlier update.

Para. 126: If the tested party’s results fall outside the range of comparable companies then adjustment will be required.