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1. Method of Separate Accounting

The separate accounts of the branch must include all operations transacted in Belgium by or through the branch. It does not matter whether the business is done with persons in the country or with foreigners. Nor does it matter whether the operations are initiated by the Belgian establishments or are simply conducted through their agency. The operations will in both cases be entered to their account for purposes of determining the profits earned in Belgium.

The accounts will include, for instance, interest received in Belgium and profits from the investment of money by the Belgian branches at the direct orders of the head office.

On the other hand, the only deductions allowed under general or administrative costs of the Belgian establishments are expenses of this kind incurred by the said establishments.

Deductible expenses do not include interest, premiums or prizes paid by the said establishments to bond-holders, nor fees paid to directors and auditors out of the profits earned in Belgium — except when schedular taxes have been paid under this head in Belgium.

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