IFRS 15 Revenue Flowchart — Belgium Edition

IFRS 15 in Belgium

IFRS 15 Adoption in Belgium

Belgium adopted IFRS 15 Revenue from Contracts with Customers through the EU endorsement mechanism, effective for annual periods beginning on or after 1 January 2018. Belgian entities listed on Euronext Brussels and other regulated markets must prepare their consolidated financial statements under EU-endorsed IFRS, including IFRS 15 without modifications. The Financial Services and Markets Authority (FSMA) supervises the quality of financial reporting by listed entities. Non-listed Belgian entities prepare their individual and consolidated financial statements under Belgian GAAP, which is governed by the Code des Sociétés et des Associations (CSA) / Wetboek van Vennootschappen en Verenigingen (WVV) and the accounting standards issued by the Commission des Normes Comptables (CNC) / Commissie voor Boekhoudkundige Normen (CBN). Belgian GAAP revenue recognition follows the prudence principle and the risks-and-rewards transfer model, differing significantly from the IFRS 15 five-step control-transfer approach.

FSMA Supervisory Expectations

The FSMA reviews the financial reporting of Belgian listed entities and has identified revenue recognition as an area requiring ongoing scrutiny. Key FSMA observations include the need for entity-specific IFRS 15 policy disclosures that explain how the five-step model applies to the entity's particular revenue streams, adequate disclosure of significant judgements affecting the identification of performance obligations and the timing of revenue recognition, and clear presentation of the impact of IFRS 15 on key financial metrics and alternative performance measures. The FSMA has aligned its supervisory approach with the common enforcement priorities published annually by the European Securities and Markets Authority (ESMA), which regularly include IFRS 15-related focus areas. Belgian entities should review both the FSMA communications and the ESMA enforcement priority statements when preparing their IFRS 15 disclosures.

Belgian GAAP Alternative: CBN/CNC Standards

Belgian GAAP, as regulated by CBN/CNC advisories, retains a traditional revenue recognition framework that is distinct from IFRS 15. Revenue is recognised when the risks and rewards of ownership transfer to the buyer, generally at the point of delivery for goods and completion or proportional performance for services. The CBN/CNC has issued advisories on specific revenue recognition topics, including the treatment of construction contracts and long-term service arrangements, but has not converged Belgian GAAP with IFRS 15. The CSA/WVV prescribes the chart of accounts (minimum algemeen rekeningenstelsel / plan comptable minimum normalisé) used by Belgian entities, which includes specific revenue categories that must be reported in the statutory accounts. Belgian entities preparing both IFRS consolidated statements and Belgian GAAP statutory accounts must reconcile differences in revenue recognition timing and measurement between the two frameworks.

ICCI Guidance and Audit Quality

The Instituut van de Bedrijfsrevisoren (IBR) / Institut des Réviseurs d'Entreprises (IRE), now operating under the governance framework of the College van Toezicht op de Bedrijfsrevisoren (CTR) / Collège de supervision des réviseurs d'entreprises (CSR), has issued guidance relevant to the audit of IFRS 15. The Institut des Censeurs de Comptes Internes (ICCI) provides practical guidance for Belgian auditors (bedrijfsrevisoren / réviseurs d'entreprises) on the application of ISAs in the Belgian context. Key audit focus areas for IFRS 15 include the identification and testing of performance obligations in complex contracts, the evaluation of management's standalone selling price estimates and transaction price allocations, and the assessment of whether over-time or point-in-time recognition has been appropriately applied. Belgian audit quality inspections conducted by the CTR/CSR have identified instances where auditors did not sufficiently challenge management's revenue recognition judgements.

Belgian Holding Company Structures

Belgium is a significant jurisdiction for holding company structures due to its participation exemption regime, innovation income deduction, and extensive tax treaty network. Belgian holding companies that hold subsidiaries engaged in diverse operational activities must apply IFRS 15 at the consolidated group level, considering the revenue recognition requirements applicable to each subsidiary's operations. The identification of performance obligations across group companies, the elimination of intercompany revenue, and the assessment of agency versus principal relationships within the group require careful application of the IFRS 15 framework. Management fees and shared service charges between holding companies and operating subsidiaries must be assessed to determine whether they represent contracts with customers within the scope of IFRS 15 or whether they are excluded as intercompany transactions eliminated on consolidation.

Industry Considerations: Pharmaceuticals, Logistics, and Chemicals

Belgium's economy includes significant concentrations in pharmaceuticals and biotechnology, logistics and distribution, chemicals, and food processing. Pharmaceutical companies face complex IFRS 15 issues including the treatment of licensing arrangements with milestone payments, the allocation of the transaction price to intellectual property licences and manufacturing services, and the assessment of whether licences represent rights to access or rights to use under IFRS 15 paragraphs B56-B63. The Port of Antwerp-Bruges, one of Europe's largest ports, anchors a substantial logistics and distribution sector where revenue from port services, warehousing, and freight forwarding requires analysis of distinct performance obligations and the principal-versus-agent determination. Chemical companies must address revenue recognition for tolling arrangements, contract manufacturing, and buy-sell arrangements where the determination of whether the entity is principal or agent significantly affects reported revenue.

Regulatory Inspection Focus Areas

FSMA reviews have identified generic IFRS 15 policy disclosures that do not explain the application of the five-step model to specific contracts, insufficient disclosure of significant judgements on performance obligation identification, and inadequate revenue disaggregation. CTR/CSR audit inspections found that auditors did not sufficiently challenge management's variable consideration estimates and did not adequately test standalone selling price allocations in bundled arrangements.