If an intra-group transaction is considered as “abnormal or gratuitous” – i.e. not being arm’s length –, Belgian tax law prescribes a transfer pricing adjustment. An abnormal or gratuitous benefit received by a Belgian company from an affiliated enterprise cannot be offset against tax losses and other deductible items available to the Belgian company, such as notional interest deduction and investment deduction (sections 79 and 207 of Belgian Income Tax Code).
Recently, the Supreme Court has ruled – contrary to previous case law of the Court of Appeal – that the tax base should in such a case be at least the amount of the abnormal or gratuitous benefit received (Supreme Court, 10 March 2016).
Basically this means that – even if a company is loss-making for the period in which it receives an abnormal or gratuitous benefit – the company will be taxed on the amount of this benefit.
If you have any further questions on the impact for your situation, please do not hesitate to contact your regular PwC adviser.