The era of the large-scale tax audit “wave” in February is over. Tax audits in Belgium are increasingly spread throughout the year, and they are becoming more targeted, data-driven and multidisciplinary. Here’s what you need to know.
What’s behind the yearly uptick?
The Belgian Tax Authorities (BTA) have moved away from the traditional model of launching large-scale, sometimes announced, thematic audit campaigns – including in transfer pricing (TP). February and March do, however, typically still bring a visible uptick in TP audit questionnaires and tax audit announcements in general. Why?
- File selection based on specific risk indicators typically takes place in January and February. Coincidentally or not, this timing also follows important filing deadlines (e.g. the Local File, Master File and Country-by-Country Reporting (notification) which may feed into and influence the administration’s risk assessment.
- Once risk profiles have been established, cases are allocated to field inspectors through a “basket system”, whereby files are grouped into baskets according to risk profile, sector or specific audit themes and distributed to inspectors based on, for example, expertise or region.
- Field inspectors then review their allocated files and decide on the appropriate course of action — whether that be sending out TP questionnaires, requesting pre-audit meetings or initiating a broader audit.
In short: there’s no longer a single wave of audits — selection is risk-based and audits can start at any time of the year. Expect a rollout of audit announcements from now on.
What we see in practice
The BTA has mature tax inspection teams and continues to evolve its approach towards TP audits and tax audits in general.
- Multidisciplinary audit teams spanning VAT, direct tax and IT-experts — we increasingly see auditors from both the VAT and direct tax administrations working together on the same file while being assisted by IT-experts. This adds a significant layer of complexity, as each discipline operates under its own distinct procedural frameworks. Taxpayers must therefore navigate two parallel sets of procedural rules simultaneously, making coordinated preparation and a unified defence strategy essential.
- Multilateral tax audits — Belgian tax authorities are still participating in joint and simultaneous audits with foreign tax administrations, particularly in transfer pricing. These coordinated cross-border audits allow multiple jurisdictions to examine the same transactions simultaneously, share information in real time and align their findings. For taxpayers, this means that inconsistencies between positions taken in different jurisdictions are more likely to be identified, making it essential to ensure that transfer pricing documentation and intercompany arrangements are coherent and defensible across all relevant jurisdictions.
- Cross-checks across tax filings — corporate income tax, withholding tax, VAT and other filings are being compared and reconciled, raising the bar for internal consistency.
- Deeper dives into substance — authorities increasingly expect taxpayers to prove their figures, not just present their bookkeeping. The focus on supporting documentation is heightened.
- Transfer pricing audits are evolving — whilst it is still being used, the TP cel is moving away from the standard TP questionnaire. We increasingly observe a direct request for such a pre-audit meeting or a targeted review based on the TP documentation filings.
What can you do now?
- Treat audit preparedness as a year-round discipline, not a seasonal exercise and have internal policies and procedures in place.
- Reconcile your CIT, VAT and other filings proactively — authorities will.
- Invest in data readiness — be able to produce and explain the numbers behind your filings on short notice.
- Ensure mandatory TP documentation is submitted timely, up to date and complete to avoid non-compliance and increase in risk-profiling score. In addition, ensure supporting documentation (e.g. contracts, OECD Local File, benchmarks, etc.) are up to date and tell a consistent story.
🎧 Go deeper — PwC’s Tax Bites podcast
Want practical guidance on how to prepare? Check out our Tax Bites podcast series where more series will follow during the year.
Listen here: pwc.be/tax-bites
This flash was co-authored with PwC Belgium’s TCDR-team, including Tim Pieters, Carla Buyens, Ann Gaublomme, Stefaan Dewachter, Gill Van Damme and Brecht Seys. PwC Legal Belgium’s team co-authored the flash, including Véronique De Brabanter, Gauthier Vael, Steve Pierrée and Tibo Gisquiere
