24 September 2020 | 12.00 p.m. - 1.00 p.m. | WTS Global | Online

We expect that post COVID taxpayers will be increasingly faced with tax disputes as a result of three converging trends. Firstly, COVID forces taxpayers to re-assess and potentially modify their business models in order to adapt to a new reality. Secondly, as a result of increased transparency (due to data breaches or through EU/OECD tax transparency initiatives) and reporting requirements, tax authorities are informed about these business changes. Thirdly, diverging interpretations of the economic notions underpinning the BEPS measures will increasingly lead tax authorities to claim taxation rights on the same profit.

Although the arm’s-length principle, which forms the basis of the framework of transfer pricing rules, has had a long international history, it was only explicitly introduced into Belgian legislation in 2004. The Belgian legislature used the Organisation for Economic Co-operation and Development (OECD) Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations Guidelines (the OECD Guidelines) and the OECD Model Tax Convention as inspiration.

Belgium offers a full range of tax incentives enabling companies to structure their R&D activities, as well as the valorization of the intellectual property (IP) resulting from R&D activities. This comprehensive R&D regime consists of tax deductions on qualifying IP income, deductions on R&D investments and (refundable) tax credits, cash savings from partial exemption from withholding tax for qualified researchers and full tax exemption of R&D subsidies. 

The Circular 2020/C/95/Frequently Asked Questions (FAQ) (Dutch version / French version) on the Belgian innovation deduction was published on July 8, 2020. The innovation deduction provides for a deduction of 85% of the net income from intellectual property (IP). This results in an effective tax rate of 4.4% (2019) and 3.8% (as from 2020) on the net income.

The filing date for the local file form (form 275 LF) as part of the mandatory transfer pricing documentation in Belgium is approaching for a large amount of Belgian entities that form part of a multinational group.

T/A economics is proud to announce Tine Slaedts joining as a partner. Tine brings a wealth of experience (+23 years) to the team.

Tine Slaedts started her career at the Belgian ministry of finance as a tax inspector, and subsequently went into consulting at the Big4. Most of the T/A economics team members have worked together with Tine at EY Belgium, where she helped managing the transfer pricing practice in Belgium and also in South Africa for some time in a stint of almost 12 years. As from April 2013, until recently, she has been responsible for building the transfer pricing practice and team at BDO. 

The first issue of the WTS Global Transfer Pricing Newsletter provides you with an update on the recent news and cases in the field of transfer pricing in 14 countries as well as an OECD update on Pillar 1.

That Covid-19 will have a significant impact on the financing of companies is quite clear (for more details on tackling financial distress, click here). While some businesses / sectors struggle with (minor) liquidity issues, others face more severe issues as the lockdown means a complete standstill to oppose the Covid-19-crisis, which might bring them in a situation of financial distress and render them insolvable in the end.

Given that the stock market, as a leading economic indicator, anticipates economic turning points, the sharp decline and volatility over the last weeks of several stock indices globally, clearly indicates that the Covid-19 crisis will have a significant economic impact. It is, therefore, not unthinkable that (groups of) companies will find themselves facing pertinent liquidity issues that might even evolve into solvability issues.