🔅 The Court of First Instance of Ghent recently ruled in favour of the taxpayer in an interesting transfer pricing dispute involving a Swiss captive reinsurance company.

In the case at hand, certain risks were insured by a Belgian company through external insurers, who reinsured said risks with a Swiss captive reinsurance company (related to the Belgian company).

1️⃣ Position of the Belgian tax authorities

🔶 The Belgian tax authorities had argued that the premiums paid by the Belgium company were not “at arm’s length” based on the fact that the Swiss captive company:
▶️ merely performed administrative duties;
▶️ only reinsured intragroup risks;
▶️ invested only in assets belonging to the group (no diversified investment portfolio);
▶️ outsourced management functions (low degree of substance);
▶️ did not manage risks / did not have the capacity to cover the risks insured,…

The tax authorities rejected the deductibility of the premiums based on Art. 26 ITC. The taxpayer challenged this position on the basis of a (very well motivated!) functional and risks analysis.

2️⃣ Reasoning of the Court of Ghent

🔶 The Court of Ghent held that the tax authorities failed to demonstrate the existence of an “abnormal or gratuitous benefit” within the meaning of Art. 26 ITC:

▶️ The Court found that the criticisms made by the tax authorities were not sufficiently substantiated (mere administrative function of the reinsurance company, no diversification, no risk management…).
▶️ Interestingly, the judge recognized the “independant” and “necessary” role of the captive reinsurance company. According to the Court, it is “appropriate” (“aangewezen”) to insure certain risks within a group of companies.
▶️ The judge stressed that the Swiss reinsurance company was duly authorized by the regulatory body in Switzerland and met all the necessary statutory requirements (in terms of solvency / risk diversification) to provide reinsurance,…

3️⃣ Abundant case-law TP (Intragroup financing, reinsurance…)

🔅 There is an abundant case-law in the field of transfer pricing.

For other recent rulings concerning intragroup financing :

▶️ Ruling of 16 June 2025 of the Court of First Instance of Antwerp: the Court endorsed the view of the Belgian tax authorities (application of the internal CUP method to challenge the arm’s length interest rate applied on an intercompany loan).

▶️ Ruling of 6 June 2025 of the Court of First Instance of Leuven in the Johnson Controls case : dispute concerning the arm’s length nature of the interest rate applied to a €800 million loan granted by a
Luxembourg finance company to the Belgian company (for other rulings, see my previous posts [1] + [2]).

Denis-Emmanuel Philippe 

[1]  Recent case-law (Johnson Controls case): (i) EU principle of prohibition of abuse – (ii) Transfer pricing (Court of First Instance of Leuven, 6 June 2025 | Denis-Emmanuel Philippe

[2] Jurisprudence – prix de transfert (Trib. Louvain, 6 juin 2025).Quand le fisc belge tente de remettre en cause le caractère « at arm’s length » du taux d’intérêt (7,22%) pratiqué sur un prêt intragroupe de 800 mio €. | Denis-Emmanuel Philippe