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13.4.4. APAs and Dispute Resolution Mechanisms

The 2003 corporate tax reform introduced a general ruling practice under Belgian tax law. Additional guidance in this respect is provided through various Royal Decrees.

The ‘Service for Advance Decisions (Service Committee)’ became an autonomous department as of 1 January 2005, as a result of the law of 21 June 2004. More than 100 specialists in various domains of taxation, including transfer pricing, assist the committee. This is a dedicated central and autonomous service within the Federal Ministry of Finance, independent from the Belgian Tax Authority. Taxpayers requiring tax certainty and elimination of potential transfer pricing disputes may apply for advance pricing agreements (APAs) to the Service Committee and obtain Unilateral APAs. Further, bilateral or multilateral APAs can be obtained with the Department of International Conventions within the Belgium Tax Authority. This service has increased flexibility in the ruling process and shortened the decision period that is usually between two and four months from the filing date in case of unilateral APAs. This committee is also able to rule prospectively on corresponding downward profit adjustments under Article 185, §2, thus offering significant transfer pricing planning opportunities.

APAs are binding on the tax authorities and are valid for a maximum period of 5 years. As from 2017, APAs are exchanged with other EU Member States as required under the EU Directive on ‘Administrative Cooperation in Tax Matters’, where the Member States automatically exchange a basic set of information on advance cross-border tax rulings and APAs.

Belgium has published the Law to transpose the EU Council Directive on dispute resolution for effective settlement of tax disputes. The Law is applicable from 1 July 2019 and  taxpayers may file complaints under the Law to the competent authorities in relation to disputes on income and capital arising in fiscal years on or after 1 January 2018.

The Law includes rules, such as the procedures and time limits for filing a complaint and its resolution by the competent authorities, to ensure effective resolution of disputes concerning the interpretation and application of bilateral tax treaties and the EU Arbitration Convention, and in particular, disputes leading to double taxation. Accordingly, complaints are required to be submitted within three years from the receipt of the first notification of the action resulting in the issue in dispute and should be resolved by mutual agreement within two years, with a possible extension of up to one year by the competent authorities. The disputes may also be resolved through an advisory commission or alternative dispute settlement commission.