Are you ready for Belgium’s 2025 Transfer Pricing audit wave?

The Belgian tax authorities (BTA) have launched a new wave of transfer pricing (TP) audits. This follows the assessment of approximately €1.17 billion in additional taxes in 2024, largely driven by TP- and other international tax related adjustments. This audit cycle is again targeting businesses of all sizes, irrespective of whether they are subject to the mandatory Belgian TP filings or not, hence ranging from large multinational corporations to small and mid-sized businesses.

As part of this TP audit wave many taxpayers have already received, or will soon receive, detailed information requests requiring comprehensive data on their transfer pricing arrangements.

Below are key observations and takeaways for businesses navigating in this evolving audit landscape. In case you need any assistance or want to pro-actively discuss how you can best prepare for such TP audit, do not hesitate to reach out to us or to your EY contact.
 

Key observations

Detailed and sometimes tailored request for information

An initial request for information (RFI) (“Vraag om Inlichtingen” / “Demande de renseignements”) on intercompany transactions/dealings and the activities of the Belgian company or branch typically marks the formal start of the audit process. The audits can extend over several months or even years, depending on the complexity of the issues involved. Once a RFI is received, companies have one month to respond. A one-month extension is typically granted but must be requested in a timely manner. Additionally, taxpayers have the option to request a pre-audit meeting, which normally should be requested within 10 days of receiving the RFI. However, it is now observed that in some cases, the BTA proactively propose a pre-audit meeting, sometimes already suggesting possible dates to the taxpayer.

Most initial RFIs contain a comprehensive standard questionnaire covering all intercompany transactions (products, services, licences, financing, …). However, in some cases, targeted questions are included from the outset. Notably, certain audits do no longer cover the traditional two-year period but instead focus on a single financial year, reflecting a shift toward a more tailored, case-specific approach.
 

Data-Driven Audits and Compliance Implications

This development may be linked to BTA’s increasing use of sophisticated data mining tools, allowing them to perform more precise risk assessments. The information requested often aligns with information included in transfer pricing documentation reports, as well as in the Master File Form (“275MF”) and Local File Form (“275LF”). In practice, tax authorities leverage this data for consistency checks against statutory figures, identifying discrepancies that may trigger further scrutiny.
 

Expanding Scope and Data Requests

Experience shows that the initial RFI is generally followed by additional detailed requests for extensive information on transactions, substance, bookkeeping and other data systems. Additionally, the scope of a TP audit sometimes expands beyond its initial focus. What starts as a transfer pricing review may extend to other tax areas, such as VAT, professional withholding tax or corporate income tax (CIT), and vice versa. Businesses should be prepared for potential cross-tax implications and ensure that their overall tax position remains consistent across different areas of compliance.
 

Pre-audit meeting can be crucial

To keep the audit focused and limit the scope of the BTA’s information inquiries, it is recommended that taxpayers proactively request a pre-audit meeting before submitting any documents. This meeting often helps shaping the audit’s direction, refine the TP audit questionnaire, and narrow subsequent inquiries. A well-prepared approach can streamline the process.
 

Key takeaways

1. Maintain a compliant TP policy and sufficiently robust TP documentation as part of a solid tax controversy strategy: Establish a structured approach to managing your TP policy and supporting TP documentation, ensuring consistency with legal requirements and business operations. Be prepared for potential discussions by developing a proactive defense strategy, including intercompany agreements, economic analyses, and support for your TP positions.
   
   
2. Conduct regular risk assessments: The selection procedure of the BTA is based on the outcome of a risk assessment analysis, performed by the tax authorities’ “MANTRA” software. Factors such as fluctuating profit margins, missing TP documentation, lack of underlying contracts, recent DAC6 filings, restructurings, or sustained losses may increase the likelihood of a TP audit. It is recommended to proactive perform risk assessments on own policies, documentation and internal financial and operational data.
   
   
3. Ensure timely documentation: prepare transfer pricing policies with the necessary support before engaging in any intercompany arrangement, as substantiating the arm’s length nature ex post could be more challenging.
   
   
4. Know your rights: both the taxpayer and the tax authorities are bound by specific procedural rules. Knowing and correctly using these rights can play a crucial role during a TP audit.