The Belgian ruling commission published its annual report for 2022 on 12 June 2023. It can be consulted here in Dutch and French. A notable decisions in relation to transfer pricing:
- Two limited risk distributors in a group, X and Y, pay pharmaceutical contributions on their turnover to the Rijksinstituut voor Ziekte en Invaliditeitsverzekering (RIZIV), which grants discounts to consumers when they purchase pharmaceutical products.
- X and Y have an agreement with the Belgian VAT administration that these levies reduce the taxable amount for VAT purposes, entitling them to a VAT refund.
- They seek confirmation that this refund can be included in their operating margin calculation for intercompany routine distribution, but the ruling commission disagrees.
- According to the transfer pricing circular 2020/C/35, subsidies can only be deducted from the cost basis/turnover if there is a direct correlation between the subsidy and the production/turnover of the goods or supply of services.
- As RIZIV subsidies benefit consumers and are not directly paid to LRDs, they cannot be deducted from LRDs’ turnover to determine operating margin.
- The VAT refund also cannot benefit the principal, as it would give an abnormal or benevolent advantage to LRDs.
Source Tiberghien
