2025 Transfer Pricing audit wave

In the ever-evolving Transfer Pricing (“TP”) landscape, one constant remains – in recent years, the start of the year is generally marked by the launch of TP audits by way of sending TP related requests for information to a number of Belgian taxpayers. While this year's audit wave commenced in February (typically over 300 requests for information being sent out), the trend in recent years indicates that on top of this initial wave in the beginning of the year, additional requests for information are being sent throughout the remainder of the year.

It is thus of utmost importance for Belgian companies (both multinational enterprises as well as small and medium-sized businesses), to be prepared for these TP audits. This tax flash provides a concise overview of the trends and key takeaways associated with the 2025 TP audit wave:

• Growing capacity within the Belgian tax authorities (BTA) to perform TP audits;
• Increased emphasis on Belgian TP compliance requirements;
• Expansion of the scope of requested information;
• Process analysis (tell me, show me, prove me); and
• Increased likelihood of Group audits.

Recently published statistics showed that the TP Squad has performed transfer pricing adjustments during 2024, leading to taxes due amounting to EUR 1,17 billion – an all-time record. Although there was one important exceptional file which is inflating the figures, it nevertheless reflects the increased number of TP audits observed in practice, as well as the fact that more aggressive positions are taken. 

In recent years, it has become evident that the responsibility for launching TP audits no longer rests solely with the TP Squad. Nowadays, next to the TP Squad (which has been expanding in the last few years to 55 persons and is expected to further grow in the future), the following departments are increasing their focus on TP related matters, resulting in a notable increase in TP audits:

• Large Enterprises control service
• (S)ME unit (“Cel Speciale Materies” in Dutch and “Cellule Matières Spéciales” in French)
• The Special Tax Inspectorate (“Bijzondere Belastinginspectie” in Dutch and “Inspection Spéciale des Impôts” in French)
• Operational Transfer Pricing (OTP) focused team

The BTA utilize advanced data mining tools to perform risk assessments and determine the companies subject to a TP audit.  Recent trends also indicate a growing emphasis on compliance with Belgian documentation requirements (most importantly the 275 LF and 275 MF) during the selection process. As a result, companies failing to meet these obligations face a higher likelihood of being selected for a TP audit.

The formal start of a TP audit typically involves an initial request for information sent to the taxpayer. Additionally, the taxpayer has the option to request for a pre-audit meeting to discuss the operations, structure and organization of the company. 

During the recent launch of the TP audit wave, it has been noted that the BTA sometimes proactively propose a pre-audit meeting to the taxpayer before sharing the complete initial request, hereby occasionally providing specific data in advance.

The request for information generally includes a standard questionnaire designed to gain deeper insights into the Group's daily operations and intercompany transactions. However, due to the increased focus on the compliance with Belgian TP documentation requirements, it has been observed that the questionnaires are being substantiated with tailor-made questions based on the information as included in the Belgian TP compliance requirements, along with an increased emphasis on certain elements such as intercompany financing.

Moreover, in recent years it has been observed that an initial TP audit can, throughout the process, be expanded to other tax area’s such as corporate income tax, VAT et cetera. This trend is currently being primarily observed in certain sectors, such as the financial sector, where it is indicated by the BTA that sub-questionnaires will be sent to examine each tax area separately.

In the current wave of TP audits, the increasing importance of operational TP (“OTP”) has emerged. Several Belgian companies have received a new questionnaire that includes a number of (broadly formulated) questions regarding “process analysis”. Throughout this questionnaire, the BTA aim to have a thorough understanding of the taxpayer's business and the processes that have a (direct or indirect) impact on its fiscal affairs. This questionnaire is being sent by a newly established department with a focus on OTP. The assessment strategy primarily focuses on three principles, being "tell me”, "show me”, and "prove me”. Considering it is the first time that such questionnaires are being sent out to taxpayers, it is important to review them thoroughly, either internally or in collaboration with an external advisor, to ensure accurate information is provided.

Finally, in the recent TP audit wave, it has been observed that different Belgian entities/branches within the same Group or companies are targeted simultaneously for a TP audit. In this way, the BTA aim to gain insight into the consistency of the TP methodology applied across the entire group and to identify any possible gaps. In such cases, a central person within the BTA’s department is designated to coordinate the audits within the Group.

The new trends within the TP audit wave highlight the necessity for Belgian taxpayers to be well-prepared for such audits, meaning to have a solid transfer pricing policy that is correctly and consistently implemented and supported by the necessary TP documentation and analyses.

If you have any questions or need assistance navigating these trends, please don't hesitate to reach out. Our team of experts is here to help you understand and implement the necessary steps to anticipate and guide you through the full process once a TP audit is launched.