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Actual audit

Actual audit

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The actual audit typically consists of multiple rounds of meetings/on location visits and additional RFIs, and can drag on for months – a phenomenon we particularly observe in cases where there has not been a clear and open discussion with the tax authorities on the rule of law and the audit process in the beginning.

  is 3 years (or 7 years in case of fraud or de facto longer in case of utilization of tax losses, which often form a peculiar topic in TP audits as you can read here).

On location visits

Typically, after having answered the first RFI, a second RFI is sent and the Belgian tax authorities make an appointment for a formal meeting. Indeed, in contrast to a pre-audit meeting this should be seen as an official visit to the taxpayers’ business premises.
Answering RFIs is not the only part of a taxpayer’s obligation to cooperate, but also accepting tax inspectors verifying the tax return at your business premises. Nevertheless, again, this is subject to certain formalities:

  • At any time, the tax official should be able to show a formal certificate (“aanstellingsbewijs”/”preuve de nomination”)

  • The free access to all of the premises used for professional purposes is limited to normal working hours, and should be limited to on-sight verification of the existence and presence of certain goods and assets; For opening inventories, archives, etc. the tax inspector must receive explicit permission from the taxpayer (and not from the present employees).

Now, in most instances, when it concerns a transfer pricing audit, such visits are planned for and accordingly do not come as a surprise. It is strongly recommended to ensure that the Belgian tax authorities are led to a separate meeting room immediately upon arrival, and do not leave that meeting room unattended. If it is being requested to do a tour, we strongly recommend to not honor such requests on short notice, but to prepare.

Nevertheless, the planned nature is not always the case, since the Belgian tax authorities have the right to visit your business premises unannounced – including for performing a transfer pricing audit. We refer to our separate section on a step plan in case of unannounced visits of the Belgian tax authorities, but can distill certain do’s & don’ts that in our view are also applicable during a regular, pre-announced visit:


  • Accompany the tax inspectors to a meeting room to let them exercise their right to interrogate passively

  • Answer questions that are overly broad (phishing expedition) with a question to be more concrete in return, and/or take time to think through answering

  • Only convey information that is aligned with the topic(s) of the audit and tax year’s concerned

  • Only give copies, and make a copy yourself of documents handed over

  • Always ‘shadow’ the tax officials if they start walking around in the business premises

  • Make note of any irregularities, and in case there are such irregularities, organise for an authenticated account (PV) drawn up 


  • Hinder the investigation beyond the scope of your legitimate rights (mind the new possibility for the Belgian tax authorities to request the court to impose a judicial penalty payment in case of obstruction)

  • Voluntarily give documents that were not requested (avoid own goals)

  • Destroy or manipulate documents

  • Leave documents lying around and exposed (clean desk during visit!)

  • Sign documents without legal counsel

  • Answer questions in a detailed manner and without careful consideration

  • Allow interviews of other persons than the taxpayer

  • Allow making copies themselves

  • Allow opening cupboards, archives, etc.

  • Allow review of documents without the presence of the taxpayer

Multiple rounds of RFIs and meetings

Considering that multinationals generally have multiple types of intragroup relations and as transfer pricing is a complex topic and not an exact science, it should not come as a surprise that a transfer pricing audit actually consists of more than one RFI and audit meeting.

Moreover, there is no pre-determined period in which the tax authorities have to take a (final) position in the transfer pricing audit. It should be noted, however, that each time an RFI is issued the normal timeframe of 3 business days + 1 month applies (unless otherwise agreed upon). Typically, in our experience, the actual audit process takes about one year, but may be longer or shorter depending on the complexity of the audit. The only limit in this respect concerns the tax years that can be investigated in view of the Belgian statute of limitations which generally are:

  • 3 years in case the tax return has been filed on time (or 10 years in case of fraud or de facto longer in case of utilization of tax losses, which often form a peculiar topic in TP audits as you can read here).

  • 4 years in case of no filing or late filing of the tax return.

  • 6 years in case of “semi-complex tax returns”.

  • 10 years in case of “complex tax returns” and suspected tax fraud (with prior notification).

Hence, generally, there is plenty of back-and-forth communication between the tax inspectors and the taxpayer, which at a certain point in time seems to be very frustrating for taxpayers since it appears that their does not come an end to the stream of information gathering. As mentioned earlier, however, being lenient in providing ‘excess’ information in the beginning of the audit process (for the sake of creating good vibes), in our experience has not been the right formula to have an efficient audit process in the end. Rather, our experience teaches us that an audit process that is governed from the beginning by a clear and pronounced model for cooperation based on the legal obligations and rights of both parties, tends to be more successful both in view of efficiency and efficacy.

If, nevertheless, the audit process seems to produce an unreasonable number of never-ending questions that seem to be going nowhere, for instance since you gave the inch in the beginning, and they are now are taking the mile, a few techniques could be of use, and have proven to be successful:

  • If not considered up until that moment, introduce a new team to assist you that is able to handle both the procedural as well as the transfer pricing technical aspects of your case, since such new blood can provide for a new perspective in view of re-calibrating the rules of engagement (procedural focus), as well as in view of the most pressing transfer pricing items (second opinion, corroborative views, clearing earlier communicated information that could have had an adverse impact). Despite that we are recommending to be cautious with information supply and managing the process from the beginning we have entered into various cases down the road to turn the tide and come to a resolution efficiently by interfering in the procedural process management as well as issuing second opinion reports.

  • Another interesting technique that could be combined with the aforementioned, and definitely is worthwhile to consider when it is unclear in what direction the Belgian tax authorities are considering your transfer pricing policy to constitute an issue that could be subject to rectification, is to switch the debates from information request and supply to exchange of ‘position papers’ to streamline discussions and facilitate outcome. We even have had multiple experiences lately that the use of the (non-formal) ‘position papers’ technique (prior to issuing a (formal) Rectification Notice) has become a practice that is initiated by the transfer pricing audit cell themselves nowadays as means of ‘negotiation’. When, as a taxpayer, duly consideration is given to the management of the burden of proof (which is case specific, depending on the type of grounds for adjusting transfer prices), this proves to be an efficient mean to target discussions and come to a closing efficiently indeed. However, to be successful this technique requires a seamless integration of procedural expertise (to make the appropriate reservations to retain your legitimate rights in the most optimal manner) and deep technical transfer pricing knowledge (enabling well founded, multi-layer and/or multi-perspective argumentation), negotiation skills and of course a ‘game plan’ to bring the audit from a discussion phase to a conclusion phase.

In the end, the tax authorities will have the final say in respect of their position to close the audit, and will issue a Rectification Notice (as starting point of the formal administrative procedure), unless there is full agreement that the tax return should not be reassessed. Also, when on the basis of the audit phase discussions described above lead to an agreeable outcome that nevertheless requires a reassessment of the tax return such Rectification Notice can be expected (to which then, in such case, one can simply agree in writing, upon which the Taxation Notice and Taxation follows).

« Previous step:Replying to (first) RFI
Next step:Rectification Notice»
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