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Home>News>International Tax Update: Belgian transfer pricing country profile at refers to the latest Belgian transfer pricing circular letter, whereas arguably the OECD Transfer Pricing Guidelines are more relevant as a source of reference

Friday, 14 January 2022

International Tax Update: Belgian transfer pricing country profile at refers to the latest Belgian transfer pricing circular letter, whereas arguably the OECD Transfer Pricing Guidelines are more relevant as a source of reference

On 13 December 2021, the OECD updated several country profiles and added profiles for three new countries (a second batch further to the first batch that was released in August 2021). An overview of the updated country profile can be found in an article we recently published (link). One of the countries for which an updated country profile is included in the second batch is Belgium. The previous version of Belgian’s country profile dates back to October 2017. In this updated country report, reference is made to the Belgian Circular Letter of 25 February 2020 with respect to transfer pricing (hereafter “Circular Letter”). This Circular Letter confirms that the Belgian tax authorities adheres to the 2017 OECD Transfer Pricing (“TP”) Guidelines (which is “soft law”), but also includes the interpretations and preferences of the Belgian tax administration regarding various transfer pricing topics. Previously, we made some important comments with respect to its content (see this link). As the Belgian tax authorities in this OECD country profile specifically refer to this Circular Letter, we should reiterate some of those comments that remain relevant for taxpayers.

An interesting observation in this updated country profile is that for financial transactions, reference is made to the Circular Letter specifically (in addition to articles 54 and 55 of the Belgian Income Tax Code) and not to the OECD TP Guidelines in general (as opposed to other topics). 

Hereafter you may find a short summary of our key remarks on the content of this Circular Letter.

  • Timing / entry into force of the Circular Letter: there are some concerns regarding the retroactive effect of certain paragraphs of the Circular Letter that we believe deviates from the 2017 OECD TP Guidelines. The retroactive application of legislation requires that strict principles are abided by (confirmed by the case law of the Belgian Constitutional Court). However, royal/ministerial decrees and circular letters cannot be applied in a retro-active way, as this violates the principles of good administration. In conclusion, using the relevant version of the OECD TP Guidelines applicable to the transaction/arrangement under review is key.
  • There are fundamental discrepancies between the (literal) reading of the 2017 OECD TP Guidelines and the final Circular Letter – most notably in relation to the first chapter, including the basic translation of the arm’s length principle itself that contains a discrepancy.
  • A circular letter is only binding for the tax authorities, not for the taxpayer. This means that the taxpayer is not obliged to follow the Circular Letter, and certainly not if the Circular Letter seems to represent an erroneous interpretation of the OECD TP Guidelines (being soft law itself…). Furthermore, a (normative) standpoint taken by the tax authorities by means of a circular letter cannot have the reversal of the burden of proof as an objective nor as a consequence.
  • The earlier note on financial transactions is especially relevant as certain sections of the Circular Letter, in our view, are not fully aligned with the OECD TP Guidelines. An example is the interpretation/preference of the Belgian tax authorities regarding structural positions in a cash pooling, which should not be determined through a mechanical measurement, but rather based on the relevant facts and circumstances of the cash pool (positions).

In practice, we observe that tax authorities in transfer pricing audits regularly attempt to impose their interpretation and preferences set out in this Circular Letter, often without thoroughly considering the burden of proof. In the end, it should be noted that both tax authorities and taxpayers should use the (relevant version of the) OECD TP Guidelines as well as relevant Belgian legislation and procedures to assess the arm’s length principle. It is therefore crucial for taxpayers to know their rights, make sure that tax authorities follow the relevant procedures and tax laws, and act within the boundaries as foreseen by the legislature. For more information and tips & tricks on this and related matters, we refer to our website devoted to Belgian transfer pricing audits (

If you have questions or would like to obtain more information on this topic, do not hesitate to contact the authors:

Ben Plessers – Senior Manager at Tiberghien economics (

Stefanie Van heugten – Senior Consultant at Tiberghien economics (

 Tiberghien’s international tax team will continue to monitor these and other tax developments relevant for Belgium / Luxembourg based multinational enterprises. Our editorial board consists of:


In case you have further questions on this publication or want to discuss a tax query, please do not hesitate to contact the author(s) or one of the members of the editorial board.

This newsflash is for information purposes only and cannot be relied upon as legal advice.


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