Belgium – Transfer Pricing (2025)

Legal framework and scope

Belgium’s domestic framework incorporates the arm’s length principle both explicitly and implicitly. The explicit statutory reference appears in Art. 185, §2, BITC 92. Additional implicit references relevant to transfer pricing include Arts. 26, 54, 79 and 206/3 BITC 92, which use the wording “abnormal or benevolent” advantages, and Art. 344 BITC 92, which refers to “legitimate need of a financial or economic nature.” The OECD Transfer Pricing Guidelines have a recognized interpretative role in Belgium’s practice, supported by the parliamentary memorandum accompanying the Law of 21 June 2004 that introduced Art. 185, §2 BITC 92, by Circular Letter n° AFZ/98-003 dated 28 June 1999, and by Circular Letter n° 2020/C/35 of 25 February 2020. These administrative instruments allow the OECD Guidelines to be used as a source of interpretation of the cited articles and permit ambulatory application of newer versions as clarifications of earlier versions; where new versions introduce genuinely novel concepts, their application is limited to transactions occurring after publication. The profile does not provide a definitive list distinguishing what constitutes a clarification versus a novelty in subsequent OECD releases.

Arm’s length principle and the role of the OECD Guidelines

Belgian tax administration formally recognizes the OECD Guidelines as an interpretative source and summarizes their guidance throughout Circular Letter n° 2020/C/35. The administration accepts the ambulatory use of updated OECD Guidelines as clarifications of earlier versions and applies newer guidance prospectively where it includes novel concepts. The parliamentary memorandum and the circulars cited serve as the administrative basis for this approach when applying Arts. 185 and 26 BITC 92 and related provisions.

Definition of related parties

Belgium’s domestic profile refers to the definition of related parties in the commentary to Art. 26 BITC 92 and to provisions in the Belgian Code of Companies (Arts. 10, 11 and 13). In practice, a party is related to another through direct or indirect control. The profile does not introduce quantitative ownership thresholds beyond the concept of direct or indirect control as reflected in the commentary and company law.

Methods and selection criteria

Circular Letter n° 2020/C/35 of 25 February 2020 explicitly allows the use of the OECD-recognized transfer pricing methods—CUP, Resale Price, Cost Plus, Transactional Net Margin Method (TNMM) and Profit Split—and grants multinational enterprises the freedom to apply any other method not described in the OECD Guidelines if that method produces a more appropriate transfer price. This is recorded in § 29 of the Circular Letter. For method selection, Belgium applies the “most appropriate method” criterion rather than a fixed hierarchy, as set out in § 22 of Circular Letter n° 2020/C/35.

Comparability and ranges

The Belgian administration follows the comparability analysis guidance in Chapter III of the OECD Guidelines; Circular Letter n° 2020/C/35 summarizes these rules in §§ 69–126. Belgium does not favor domestic comparables over foreign comparables and disallows the use of secret comparables. Regarding statistical ranges, §§ 123–126 of Circular Letter n° 2020/C/35 confirm that the administration allows the use of an arm’s length range. Except in exceptional cases where all comparables show a very high degree of comparability (and where it may be acceptable to use the full range), the Belgian administration typically requires the use of the interquartile range. If the tested party’s result falls outside the (interquartile) range accepted, the administration will generally adjust toward the median of the accepted interquartile range. Comparability adjustments are permitted when they improve comparability, in line with §§ 118–122 of Circular Letter n° 2020/C/35.

Documentation and reporting

Belgium requires transfer pricing documentation consistent with BEPS Action 13: Master File, Local File and Country-by-Country (CbC) Report consistent with Annexes I, II and III to Chapter V of the OECD Guidelines. Belgian entities that are part of an MNE must prepare Master File and Local File when the MNE meets at least one of the following criteria: operational turnover greater than EUR 50 million; consolidated balance sheet total greater than EUR 1 billion; or a staff headcount of more than 100 full‑time equivalent employees. The Master File must be filed no later than 12 months after the end of the MNE group’s fiscal year; the Local File must be filed together with the Belgian entity’s annual tax return. The Local File includes an additional return to be completed when a relevant business unit has intra-group transactions exceeding EUR 1 million. All returns may be completed in English, French, Dutch or German. Relevant legal and administrative references include Art. 321/1 – 321/7 BITC 92, Circular Letter 2017/C/56 (4 September 2017) and Circular Letter 2019/C/14 (8 February 2019). The Country-by-Country Reporting framework follows the OECD guidance.

Penalties for documentation non-compliance are provided under Art. 445bis, §3 BITC 92; fines for non-filing, incorrect or incomplete filing range from EUR 1,250 to EUR 25,000.

Safe harbours and simplification measures

The country profile states that Belgium does not provide general statutory safe harbours or simplifications across industries beyond the administrative application of the OECD-endorsed simplifications. However, Belgium permits the simplified approach for low value‑adding intra‑group services under Chapter VII of the OECD Guidelines and Circular Letter n° 2020/C/35 (§§ 182–188), applying a mark‑up of 5% on relevant costs when the simplified approach is appropriate.

Advance Pricing Agreements (APAs), Mutual Agreement Procedures (MAP) and dispute prevention

Belgium offers an array of administrative tools to prevent and resolve transfer pricing disputes. Available mechanisms include rulings, enhanced engagement or cooperative compliance programmes (Co‑operative Tax Compliance Programme, CTCP), and APAs (unilateral, bilateral and multilateral). Belgium participates in the OECD International Compliance Assurance Programme (ICAP), is a participating administration in the ETACA project, and maintains MAP procedures. The profile refers readers to the Belgian MAP Profile for procedural details. Competent Authorities can agree to apply the Authorized OECD Approach (AOA) to specific cases; Belgium has a Competent Authority Agreement with the United States committing both parties to implement Art. 7 in line with the 2010 AOA.

Sanctions and other considerations

Belgium allows downward corresponding adjustments even in the absence of a mutual agreement procedure, pursuant to Art. 185, § 2, b) and Art. 376, § 1 BITC 92. Year‑end adjustments are permitted (allowed but not required) by the domestic framework. The profile records that Belgium does not provide for secondary adjustments as a formal domestic rule.

Financial transactions and other rules

Belgium issues specific guidance on financial transactions consistent with Chapter X of the OECD Guidelines; Circular Letter n° 2020/C/35 summarizes the relevant positions in §§ 245–267. Beyond transfer pricing-specific guidance, Belgium has enacted several rules limiting interest deductibility: non-deductibility of total interest paid to an associated entity located in a low‑tax jurisdiction; non-deductibility of exceeding interest that exceeds arm’s length interest; non-deductibility of exceeding interest paid to entities in low‑tax jurisdictions where the recipient has a thin cap ratio of 5:1 or higher; and a general limitation on the deductibility of net interest that exceeds 30% of EBITDA or EUR 3 million, in line with BEPS Action 4 and EU Directive 2016/1164. The profile cites Arts. 54 and 55 BITC 92, Art. 198, §1, 11° BITC 92 and Art. 198/1 BITC 92 for these measures.

Cost contribution arrangements and intra-group services

Belgium allows cost contribution arrangements and follows the guidance of Chapter VIII of the OECD Guidelines, summarized in §§ 190–211 of Circular Letter n° 2020/C/35. Intra‑group services guidance follows Chapter VII of the OECD Guidelines and is summarized in §§ 164–189 of Circular Letter n° 2020/C/35. The simplified approach for low value‑adding intra‑group services is permitted with a 5% mark‑up on relevant costs (§§ 182–188).

Attribution to permanent establishments and treaty positions

Belgium follows the Authorized OECD Approach for attribution of profits to permanent establishments, as reflected in Circular Letter n° 2020/C/35 (Ch. XI, §§ 268–286). Regarding tax treaties, at the time of the profile Belgium has 91 treaties containing Article 7 as it read before 2010 and 3 treaties containing Article 7 as it reads after 2010. Several newly signed agreements not yet in force include six treaties with the pre‑2010 text and two with the post‑2010 text. Belgium can and does agree with competent authorities of other jurisdictions to apply the 2010 AOA to individual cases; for example, a Competent Authority Agreement with the United States commits both administrations to implement Art. 7 in line with the 2010 AOA.

Other relevant procedural points and conclusion

The Belgian administration has elaborated Circular Letter n° 2020/C/35 to summarize and explain how the OECD Guidelines are applied in practice across a range of topics. Belgium offers a comprehensive set of preventative and cooperative mechanisms (rulings, APAs, MAP, CTCP, ICAP participation) and aligns its documentation requirements with BEPS Action 13 thresholds and timing (Master File due within 12 months of group year-end; Local File with the tax return; CbC reporting consistent with OECD Annex III). The administration enforces documentation obligations with monetary penalties (EUR 1,250–25,000) and applies a pragmatic approach to comparability analysis (preference for interquartile range and correction toward the median when appropriate). Interest deductibility and thin capitalization measures reflect BEPS and EU anti‑avoidance norms (thin cap 5:1; 30% EBITDA or EUR 3 million threshold).

Where the country profile does not provide specific domestic guidance, practitioners should refer to the OECD Transfer Pricing Guidelines and to the Belgian legal provisions and circulars cited in this profile for further clarification.

References

For further information and access to OECD country transfer pricing profiles, see: https://www.oecd.org/en/topics/sub-issues/transfer-pricing/transfer-pricing-country-profiles.html