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Deadlines are short—groups must digitally file the detailed form in XML format within 30 days after the start of the fiscal year for which a group enters the scope of the Pillar Two rules, or by July 13 if that date falls later. The Belgian tax authorities recently announced the latter date is extended until Sept. 16 for groups not making Pillar Two prepayments.
Completing the form requires a thorough scoping analysis to identify all reportable entities as well as their Pillar Two status. The administrative process to effectively submit the form may also take time. Before submitting the form it may be necessary for example to designate a Belgian entity to represent the group for Pillar Two purposes in case of multiple entities and to create a mandate for the person/adviser that will file the notification in case of outsourcing.
Reportable Information
The notification consists of four parts and requires disclosing a substantial volume of information relating to the group and the Pillar Two status of relevant group entities.
Part I requires general information on the group, including the group name (which should be unique and can’t correspond to the name of the ultimate parent entity or any other entity), start and end date of the reporting period, address and contact details, and details of the individual representing the UPE.
There is some uncertainty on whether this individual should be a formal legal representative of the UPE—that is, one of its directors. The form requires the UPE legal representative’s national identification number or BIS-number (the Belgian identification number for nonresidents). If the UPE doesn’t have a Belgian resident director, one of its directors should apply for a BIS number, which may be a challenge considering the short deadline.
However, based on the text of the law and the tax authority’s Frequently Asked Questions published June 21, the group should in our view be free to appoint any mandate holder—such as a Belgian resident director/employee of the Belgian subsidiary—as “representative” for carrying out the obligations of the group/UPE in relation to Pillar Two.
Part II of the form requires detailed information on the consolidated financial statements of the UPE used for Pillar Two calculation purposes, including the accounting standard, currency, and online publication location.
Part III requires extensive information about the group’s ownership structure, including, for each reportable entity, the taxpayer identification number, Pillar Two status, subgroup, and type of excluded entity (if applicable).
All Belgian or foreign UPEs, intermediate parent entities, or partially owned parent entities—regardless of their link with Belgium—as well as all Belgian group entities should be reported.
In the case of a Belgian UPE, intermediate parent entity or partially owned parent entity, all Belgian and foreign entities below the parent entity should be reported. Depending on the group’s size and structure, reporting all intermediate parent entities and partially owned parent entities may be a burdensome exercise and also raises questions on why it is relevant for the tax authority to receive such detailed information at this stage.
The form provides 19 Pillar Two status options for each reportable entity—such as UPE, intermediate parent entity, partially owned parent entity, constituent entity, joint venture, investment entity—where multiple options can be selected. For example, an entity can be both an intermediate parent entity and a constituent entity.
For each reported entity, the subgroup to which it belongs should be indicated, for example, joint venture group, investment entities group, minority owned subgroup—and including the tax identification number of the entity on top of the subgroup.
If no specific subgroup applies, the subgroup “constituent entities” should be indicated, in which case the parent entity of the relevant entity (which isn’t necessarily the UPE) is the “entity on top of the subgroup.”
Part IV requires contact details of the entity that will act as the contact point for the group.
When submitting the notification, the entity should indicate whether it wishes to make use of Pillar Two related prepayments, although this isn’t binding.
Filing Process
Groups with Belgian nexus that are in scope of the Pillar Two rules must make a notification filing to register at the Crossroads Bank for Enterprises, the CBE, and obtain a CBE number. This number facilitates communication on Pillar Two with the Belgian tax authorities, the filing of relevant Pillar Two returns, making prepayments, and the assessment of top-up tax.
The obligation applies to all in-scope groups irrespective of whether any Pillar Two top-up tax will be due or whether safe harbors will be relied upon.
The notification should either be filed by the UPE if it’s established in Belgium, or by a Belgian group entity in case of a nonresident UPE. For multiple Belgian entities, an entity should be appointed as an agent through a mandate for filing purposes.
Copyright 2024 Bloomberg Industry Group, Inc. (800-372-1033) www.bloombergindustry.com. Reproduced with permission.
