This update incorporates the OECD Report on Amount B into Belgian administrative practice, aligning with Pillar One of the Two-Pillar Solution to streamline and standardise the application of the arm’s length principle for baseline marketing and distribution activities.
The Belgian Ministry of Finance has released Circular 2026/C/45 on 19 March 2026, introducing an addendum to the transfer pricing guidance set out in Circular 2020/C/35.
The Circular clarifies how multinational enterprises should apply streamlined transfer pricing methods to qualifying distribution transactions.
This update incorporates the OECD Report on Amount B into Belgian administrative practice, aligning with Pillar One of the Two-Pillar Solution to streamline and standardise the application of the arm’s length principle for baseline marketing and distribution activities.
As part of the Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalisation of the Economy agreed by the OECD/G20 Inclusive Framework on BEPS in October 2021, Amount B provides for a simplified and streamlined approach to the application of the arm’s length principle to in-country baseline marketing and distribution activities, with a particular focus on the needs of low-capacity countries. Content from the report has now been incorporated into the OECD Transfer Pricing Guidelines.
What transactions are covered?
The new framework applies to two main types of controlled transactions:
- Wholesale distribution activities, where a distributor purchases goods from related entities and resells them to unrelated parties
- Agency and commissionaire arrangements involving the wholesale distribution of goods from related companies
To qualify, distributors must meet specific operational thresholds. Annual operating expenses must fall between 3% and a ceiling of 20-30% of net annual revenues. Belgian authorities clarified that this quantitative filter only determines eligibility and does not define distributor characterisation generally.
Excluded activities and special circumstances
Several transaction types remain outside the simplified approach. The guidance excludes the distribution of intangible goods and services, as well as commodity trading. Transactions where both parties share economically significant risks or make unique, valuable contributions also fall outside the scope.
Sector-based pricing matrix
The framework uses a pricing matrix organised by three industry categories and two factor intensity measures: operating asset intensity and operating expense intensity relative to sales. These factors are calculated using a weighted average over the preceding three years.
Returns must fall within the applicable matrix range, with flexibility of plus or minus 0.5%. Two adjustment mechanisms may apply: an operating expense cross-check and a data availability adjustment for jurisdictions with insufficient data representation.
Implementation requirements
Belgium will accept the simplified approach results when covered jurisdictions apply it to their resident taxpayers, subject to two conditions. First, the covered jurisdiction must implement the approach in domestic legislation consistent with the OECD framework. Second, a tax treaty must exist between Belgium and that jurisdiction.
Documentation and dispute resolution
While Belgium will not apply the streamlined approach to distribution transactions occurring on Belgian territory, it recommends documenting the methodology when applied. In mutual agreement procedures with covered jurisdictions, Belgian authorities may provide corresponding adjustments aligned with the simplified approach results on a case-by-case basis.
The covered jurisdiction list, published on the OECD website, will be reviewed every five years. The pricing matrix analysis supporting the return ranges will likewise be updated quinquennially unless significant market changes warrant earlier revision.
This guidance supplements Belgium’s existing transfer pricing circular 2020/C/35 without modifying underlying arm’s length principles. The framework aims to reduce compliance burdens and enhance tax certainty for both taxpayers and tax administrations dealing with baseline distribution activities.
