Belgian-Macedonian Business Club

Time to visit Belgium, the seat of many EU institutions, the proud inventor of French fries, waffles and of beer brewed from just about any ingredient, and more recently, of rampant TP audit activity.

by David Zářecký, Transfer Pricing Advisor at Reptune

In 2024, Belgium collected EUR 1.1bn worth of tax from TP (transfer price) assessments. These statistics are hard to come by at country level, but we do have a recent comparison from UK, which advertised GBP 1.8bn haul in a comparable period recently. Adjusted for GDP levels between the two countries, it turns out Belgian TP inspectors are 3x more efficient in collecting tax than their British counterparts.

Belgian tax authority is also apparently keen on the use of data mining tools to perform risk assessments and determine which companies should be subject to a TP audit, as KPMG reports.

Belgium is uniquely equipped for this, because their regulations mandate that Local File and Master File be proactively submitted by taxpayer each year together with their CIT returns. In addition, Local File is not just a narrative report, as you would expect based on the OECD BEPS Action 13 standard, it is an XML form with many data points, including transactional amounts, methods used, results achieved. It could be thanks to all this extra quantitative data that the Belgian tax administration may have an edge compared to other authorities which would be in the dark as to all these juicy details.

This brings me to a final reflection. Sometimes clients at Reptune (formerly TP Tuned) ask us (and indeed we ask ourselves) at which point the narrative part of TP compliance will disappear, because who is interested in reading interminable 200+ page documents at the age of AI.

And it is probably true that the future will be more about quantitative rather than qualitative analysis. If a lot more quantitative information is automatically gathered as part of filing your CIT return, the qualitative narrative would only be needed ad hoc when the initial data mining analysis finds discrepancies or high-risk fact patterns.

Then again, as long as the arm’s length principle is alive, not everything can be formulated quantitatively – you will still need to explain who does what, under which conditions, and what the relevant economic factors are. That can only be conveyed through a narrative which cannot be easily compressed into a series of drop-down menus in a machine-readable form. The most likely outcome is therefore – the TP compliance cycle will continue to comprise both elements.

Also see “2025 Transfer Pricing audit wave – a wrap-up of key takeaways” from Yves de Groote, KPMG