Due to the introduction of the mandatory transfer pricing documentation in Belgium in 2016, the filing date for the local file form (form 275 LF) for a large amount of Belgian entities that form part of a multinational group is approaching for the second time.
New this year is that not only the general part of the local file form, i.e. the sections A and C of the 275 LF form, must be submitted by Belgian group entities exceeding the relevant thresholds. The detailed information form, i.e. section B, must now be submitted as well, under certain conditions. Where the sections A and C can be completed relatively easily, section B - consisting of tables for which detailed numerical data and information on the TP methodology are requested - requires a greater effort of the submitter, especially considering it is the first time this section is to be submitted for the financial year concerned. In view of the approaching filing date, we recommend to take timely action for the preparation of these forms in order to avoid unpleasant surprises.
The filing date for the local file form 275 LF, including the detailed information form (section B), is the same as for the corporate tax return or the non-resident corporate tax return. This means, regarding assessment year 2018, in particular income from 1 January 2017 onwards, the filing date cannot, in principle, be later than six months after the closure date of the financial year, namely at the end of June for companies of which the financial year corresponds with the calendar year. The only exception is the administrative tolerance granting an extension until 28 of September.
The thresholds for the local file form remain unchanged. As a result, Belgian group entities (and permanent establishments) are obliged to submit a local file form 275 LF for assessment year 2018 if one of the following criteria is exceeded on the basis of the financial year immediately preceding the last completed financial year, assessment year 2017:
• a total of 50 million euros in operating and financial income excluding non-recurring income;
• a balance sheet total of 1 billion euros;
• the average annual number of employees of 100 full-time equivalents.
The detailed information form (section B), as part of the local file form, should only be completed if at least one of the business units - as defined and included in section A of the local file form - within the Belgian group entity exceeds the threshold of a 1.000.000,00 euros cross-border transactions with group entities in the last closed financial year. The detailed information form must be completed for each business unit exceeding this threshold.
The administration provides for an additional and optional materiality threshold for the benefit of the submitters. This materiality threshold was set at 25,000 euros per transaction and this option may be selected for tables in B3, B4, B5 and B6. If this threshold is opted for, it should be applied consistently to all business units for which a detailed information form has to be completed.
Ben Plessers - Senior Manager Transfer Pricing & Valuations T/A economics (ben@TAeconomics.com)
Heleen Van Baelen - Manager Transfer Pricing & Valuations T/A economics (heleen@TAeconomics.com)