1. Introduction

On 18 December 2020, the OECD released its guidance on the transfer pricing implications of the COVID-19 pandemic (“the Paper”).¹ It represents the consensus view of the 137 members of the Inclusive Framework on BEPS.

Although we understand that the process of drafting such guidelines, and obtaining a consensus from all relevant member states takes time, the guidance was published rather late in 2020. For companies that closed prior to 31 December 2020, the guidance was hence not yet available.

Considering that, in our view, the OECD Transfer Pricing Guidelines (“OECD TPG) as such already provided sufficient guidance on how multinational groups should deal with transfer pricing in exceptional circumstances, the value of this additional guidance is rather limited to some useful confirmations, insights and illustrations. We, of course, understand that in these unprecedented times, an organization like the OECD wants to proactively provide guidance to taxpayers and tax administrations.

The OECD has released guidance on transfer pricing implications of the COVID-19 pandemic. This guidance represents the consensus view of the 137 members of the OECD/G20 Inclusive Framework on BEPS regarding the application of the arm’s length principle and the OECD Transfer Pricing Guidelines to issues that may arise or be exacerbated in the context of the COVID-19 pandemic.

Commenting on the OECD 'Blueprints' published on Monday 12 October, Koen Morbée, partner at Tiberghien Lawyers, and Andy Neuteleers, partner at Tiberghien Economics, urged the OECD Centre for Tax Policy and Administration, when continuing its work on both Pillars, to give due attention to some basic principles of law like the principle of reality, the principle of legal certainty and the principle of equality. Quoting from the memoires of Albert Tiberghien, the founding father of the firm Tiberghien, they also respectfully questioned the disproportionate complexity both Pillars will bring in the field of national and international taxation. In addition, they addressed the difficult co-existence of two competing international tax systems and the further undermining of the at arm’s length principle.

Tiberghien and Tiberghien economics work together on HR tax and transfer pricing, which are two distinct fiscally- and economically-inspired disciplines that have more interaction than is often realised at first sight and that affect both personal income tax and corporate income tax. This article clarifies the interaction between certain aspects of, on the one hand, the structuring of remuneration schemes for employees working in cross-border group set-ups and, on the other hand, the setting of transfer prices applied between group entities for the provision of services and the consequences that such setting-up might trigger in the future.

The OECD - OCDE released the latest mutual agreement procedure (MAP) statistics as part of the BEPS Action 14 minimum standard and the wider G20/OECD tax certainty agenda to improve the effectiveness and timeliness of tax-related dispute resolution mechanisms, covering 105 jurisdictions and almost all MAP cases worldwide.

The Belgian tax authorities have communicated that the online MyMinfin platform is not available due to technical reasons till the beginning of December 2020 to submit CBC-files (form 275CBC or CBCNOT).  

The deadline of the corporate income tax returns has been extended for the third time by the Minister of Finance, initially set 24 September 2020 (for companies with a financial year-end at 31 December 2019), first time extended to 29 October 2020, second time extended to 16 November 2020, with the new and final due date set 30 November 2020. As explained in our news update dd. 13 October 2020, this extension is granted in order to enable accounting firms to deal with the overload of work directly related to the exceptional circumstances caused by the covid-19 crisis and allow them  to submit the personal and corporate income tax returns in a (postponed) timely manner.

As the end of 2020 fast approaches, we notice that many multinational companies during the coming weeks/months often perform an annual assessment of transfer prices. The key question asked is: “Has our transfer pricing policy that has been applied throughout the year resulted in an arm’s length outcome?”. This question is one that arises each year; but in 2020, which with the Covid-19 pandemic will go down in history as a year of exceptional events, this question is of an even greater importance for many companies. Some multinational companies perform such assessments on a more frequent basis and as a result face more limited (or even no) required adjustment at year-end. Transfer Pricing (“TP”) adjustments are important to manage as they assure arm’s length intercompany dealings. However, when changing intercompany pricing it is critical not to forget the impact of indirect taxes. After all, in certain situations, a TP adjustment might trigger an increase or decrease of customs duties and/or (import) VAT and could lead to some indirect tax compliance issues.

In July 2018, under the mandate of the Report on Actions 8-10 of the Base Erosion and Profit Shifting (“BEPS”) Action Plan (“Aligning Transfer Pricing Outcomes with Value Creation”), the OECD Working Party 6 published a non-consensus discussion draft on financial transactions. Although there were many comments and fundamental issues raised by various parties, the differences between the so-called non-consensus draft and the final report are rather limited (we refer in this respect to an article published by International Tax Review¹). Furthermore, it was already clear back in 2018 that countries participating in the OECD Working Party 6 could not reach consensus, the release date of the public discussion draft being behind schedule provided an indication (please find our initial comments on that non-consensus draft here).

De DVB wenst er de aandacht op te vestigen dat prefilingaanvragen of aanvragen die niet voorafgegaan zijn door een prefiling, m.b.t. verrekenprijzen of de aftrek voor innovatie-inkomsten (of octrooi-inkomsten), en die fiscale uitwerking hebben in een aangifte in de vennootschapsbelasting (of BNI/Ven.) welke waarschijnlijk eind september 2021 dient ingediend te worden, uiterlijk tegen 31 januari 2021 op de DVB dienen toe te komen zodat er nog een beslissing kan afgeleverd worden vóór de uiterste indieningstermijn van de aangifte in de vennootschapsbelasting (of BNI/Ven.).