Archive for February 29, 2012
Proficient Transfer Pricing in Europe:
Ensuring Comprehensive Documentation
Leslie Van den Branden from De Witte Viselé Associates, a sponsor company at the marcus evans European Tax Summit 2012, on avoiding transfer pricing disputes.
Interview with: Leslie Van den Branden, Partner, De Witte Viselé Associates
FOR IMMEDIATE RELEASE
Business models and documentation must be ready to be handed over to tax authorities, in order to explain why a specific tax model was set up, says Leslie Van den Branden, Partner, De Witte Viselé Associates.
From a sponsor company at the upcoming marcus evans European Tax Summit 2012, taking place in Dublin, Ireland, 26 – 27 March, Van den Branden discusses the transfer pricing environment in Belgium, tax compliance and transparency.
What is the transfer pricing environment like in Belgium?
Although there are no specific transfer pricing rules for documentation in Belgium, we follow the Organisation for Economic Co-operation and Development (OECD) guidelines and adhere to the arm’s length principle.
Belgium has a central team of ten transfer pricing auditors; however, they now have the green light to extend their team with 20 people. This will show the business community that transfer pricing audits will become more commonplace in Belgium.
How can transfer pricing disputes be avoided?
In Europe we are seeing an evolution towards tax authorities requesting tax payers to demonstrate the economic rationale for transactions. Transfer pricing and tax planning will still be possible but it will become essential to justify yourself based on the economic analysis and rationale of the transaction.
In this respect, Belgium is looking into a broader anti-abuse measure, focusing on economic substance and rationale. Tax authorities will attempt to understand why you came to Belgium and set up your business model as you did. In planning, it will be crucial to demonstrate that beyond tax benefits, economic benefits exist in order to avoid problems and have an economic substance that is well supported and documented.
Why is transparency crucial?
I strongly recommend being transparent with tax authorities. Business models and documentation must be ready to be handed over to authorities in order to explain the effects and circumstances of why a specific transfer pricing or tax model was set up.
It is important to have good documentation and justify what you have done. It comes down to what the OECD has put forward in business restrictions.
How can one improve transfer pricing compliance?
For larger firms that have often a uniform business model, it would make sense for transfer pricing policy and documentation to be monitored from a central point.
From a tax authority’s perspective, claiming very detailed local specific documentation with respect to economic analyses and benchmarks is not the correct solution. Tax authorities should accept that tax payers apply a unified approach and should accept the economic rationale of a transaction from a group perspective rather than only looking from a local company perspective; otherwise the burden of transfer pricing documentation files will remain immense, especially for large companies.
Beyond transfer pricing, what trends do you see playing out in the near future?
From a European perspective, I see two trends. First, indirect taxation (VAT) will become more significant and in my view there may be initiatives to reduce income taxes and increase consumption taxation.
Secondly, due to the evolution of the world economy and the fight against tax avoidance, tax authorities are placing more importance on the economic rationale of transactions. This might lead to more tax litigation and in any case will lead to the requirement for tax payers to develop and document sound economic-based motivations for their tax planning transactions and structures.
marcus evans, Summits Division
Tel: + 357 22 849 400
About the European Tax Summit 2012
This unique forum will take place at The Four Seasons, Dublin, Ireland, 26 – 27 March 2012. Offering much more than any conference, exhibition or trade show, this exclusive meeting will bring together esteemed industry thought leaders and solution providers to a highly focused and interactive networking event. The Summit includes visionary presentations and interactive forums on substantial fiscal deficits, minimising tax gaps and developing transfer pricing strategies.
The Finance Network – marcus evans Summits group delivers peer-to-peer information on strategic matters, professional trends and breakthrough innovations.
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Please note that the Summit is a closed business event and the number of participants strictly limited.
About De Witte Viselé Associates
De Witte Viselé Associates is an independent accounting and tax firm based in Belgium that is specialized in international taxation and transfer pricing. Our professionals are all experts with many years of experience, focusing on proposing pragmatic and robust solutions to our clients.
About marcus evans Summits
marcus evans Summits are high level business forums for the world’s leading decision-makers to meet, learn and discuss strategies and solutions. Held at exclusive locations around the world, these events provide attendees with a unique opportunity to individually tailor their schedules of keynote presentations, think tanks, seminars and one-to-one business meetings. For more information, please visit www.marcusevans.com
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