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On 15 July 2024, Belgium introduced two new Royal Decrees, which redefine the Local File Form (275LF) and Master File Form (275MF). These revised formats are mandatory for qualifying taxpayers and must be submitted via the Belgian tax authorities’ online portal (MyMinfin) for financial years commencing on or after 1st January 2025. Additionally, modifications have been made to the requirements for the country-by-country reporting notification (275CBCNOT).
These decrees come in replacement of Royal Decrees of 28 October 2016 concerning transfer pricing documentation. These new decrees expand the scope of requested information in the Local and Master file but also requires submitting available transfer pricing documentation, framework agreements and model contracts. Furthermore, form 275CBCNOT must now also be submitted in cases where a notification obligation is terminated.
BACKGROUND
Belgium is initially following the three-tiered approach of the OECD’s Base Erosion and Profit Shifting (BEPS) Action 13 initiative, consisting of three documents: Local file, Master file and Country-by-Country Report. This documentation must be filed as from financial years starting from 1 January 2016.
Entities subject to these filing requirements include Belgian group entities or Belgian branches of foreign entities that meet at least one of the following financial criteria in their statutory financial accounts for the preceding year:
- Total operating and financial revenues of at least EUR 50 million (excluding non-recurring items);
- Total assets (balance sheet) of at least EUR 1 billion;
- Average annual workforce of at least 100 full-time employees (FTEs).
The Local File Form must be filed annually as an integral part of the corporate income tax return. The Master File Form must also be submitted annually within 12 months after the group’s financial year-end.
Moreover, each Belgian entity in a multinational group with a consolidated turnover exceeding EUR 750 million must file the country-by-country reporting notification. This form clarifies whether the Belgian entity is the ultimate parent, a surrogate parent, or a constituent entity and identifies the entity responsible for filing the CbC report. From FY2019, a new notification is required only when changes occur compared to the previous submission.
Key Changes in the New Royal Decrees
Belgium has refined Forms 275LF, 275MF, and 275CBCNOT to enhance compliance, improve risk assessments, and align with the 2022 OECD Transfer Pricing Guidelines, particularly regarding hard-to-value intangibles and financial transactions.
Local File Form (275LF) Updates
The revised form largely retains the previous structure but introduces several significant modifications:
- More granular disclosure of intercompany transactions by business unit and counterparty country where cross-border transactions exceed EUR 1 million.
- Mandatory submission of the Local File TP methodology, transfer pricing studies, framework agreements, and model contracts as readable PDFs.
- Expanded disclosure requirements including:
- Tax identification numbers of competitors and foreign permanent establishments (PEs) of Belgian entities.
- Details of cost contribution agreements, advance pricing agreements (APAs), rulings, and in-house (re)insurance policies.
Master File (275MF) Updates
While the format remains unchanged, the explanatory notes now include additional expectations:
- Expanded value chain and functional analysis, requiring greater detail and alignment with transfer pricing outcomes.
- Comprehensive DEMPE (Development, Enhancement, Maintenance, Protection, and Exploitation) analysis for intangibles, including listing hard-to-value intangibles.
- Enhanced reporting of financial transactions, including financial guarantees and captive insurance arrangements.
Country-by-Country Reporting Notification (275CBCNOT) Updates
While the structure of Form 275CBCNOT remains consistent, the key revision introduces mandatory filing for notification terminations. Entities must now specify whether the submission represents:
- A first notification.
- A modification of a previous notification.
- A termination of a notification obligation.
Implications and Next Steps
With these regulatory updates, Belgian tax-resident companies and establishments within multinational groups should carefully assess their transfer pricing documentation and filing requirements for financial years beginning on or after 1 January 2025.
Key areas requiring attention include:
- Ensuring compliance with the new submission requirements for Forms 275LF and 275MF, particularly concerning supporting documentation.
- Preparing for additional disclosures beyond the OECD Guidelines.
- Updating internal processes to align with the new country-by-country reporting notification requirements.
We strongly recommend companies reviewing their current compliance frameworks
If you would like to receive additional information on this matter or require tax assistance, the RSM Belgium Tax team is at your disposal [email protected]).
