On 15 July 2024, Belgium released updated versions of the Local File Form (275.LF) and Master File Form (275.MF) through new Royal Decrees dated 16 June 2024. These revisions ask qualifying taxpayers to submit these forms online for financial years commencing on or after 1 January 2025. Concurrently, updates to the country-by-country notification (275.CBC.NOT) requirements were introduced.
Replacing the prior decrees from 2016, these updates expand the scope and detail required in both the Local and Master File Forms. They now necessitate the submission of comprehensive transfer pricing (TP) documentation, including framework agreements and model contracts. Importantly, Form 275.CBC.NOT must now also be filed in cases where the notification obligation ends.
Background
Belgium implemented mandatory transfer pricing documentation and country-by-country reporting in response to OECD’s Action 13 on Base Erosion and Profit Shifting (BEPS), effective from financial years beginning 1 January 2016. Entities meeting specific financial thresholds are obliged to file:
- Master File (275.MF): Details on the group’s operations and TP policies.
- Local File (275.LF): Transactional specifics and TP methodologies, integral to the income tax return.
- Country-by-Country Reporting Notification (275.CBC.NOT): Reporting entity structure and filing obligations within multinational groups.
New Royal Decrees Enhance Requirements
The recent Royal Decrees reflect enhanced insights and regulatory developments since the initial implementation of transfer pricing laws. Key enhancements include:
Local File form (275.LF):
- Detailed breakdown of intercompany transactions per business unit and per country.
- Requirement to submit TP methodologies and related documentation in PDF format.
- Mandatory submission of framework agreements and model contracts.
Master File form (275.MF):
- Introduction of an analytical framework for value chain and functional analysis.
- Expanded requirements for DEMPE (Development, Enhancement, Maintenance, Protection, Exploitation) functions related to intangibles.
- Detailed disclosures on financial arrangements, surpassing OECD Guidelines.
Country-by-country reporting notification (275.CBC.NOT):
- Clarification on filing requirements for initial notifications, modifications, and termination obligations.
Conclusion
Belgian tax resident companies within multinational groups are urged to review these updated requirements ahead of financial years starting on or after 1 January 2025. The revisions to Forms 275.LF, 275.MF, and 275.CBC.NOT signify a shift towards more detailed and transparent transfer pricing documentation. These changes show Belgium’s commitment to aligning with international standards while enhancing tax transparency and compliance.
For tax professionals and investors, understanding these updates is crucial for navigating Belgium’s evolving regulatory landscape and ensuring compliance with the latest transfer pricing requirements.
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