The EU General Court of Justice on July 19 dismissed Belgium’s application to temporarily suspend an EU Commission decision that concludes that Belgium’s excess profits tax ruling system granted illegal State aid to multinationals and that orders immediate recovery of the aid.
The Commission decision, issued last January, found that Belgium granted a selective advantage to 36 multinationals through its excess profits tax ruling system, contrary to EU law. According to the Commission, the companies received illegal aid of about €700 million (USD $785 million) in unpaid taxes.
The Commission’s decision, in Articles 2, 3, and 4, ordered Belgium to immediately begin to recover the aid plus interest from the multinationals that benefited from the scheme; to provide the Commission with information about the recovery efforts; and to stop granting further benefits under its excess profits tax ruling scheme.
On March 22, Belgium filed suit in the EU General Court, seeking to annul the Commission’s decision. Belgium followed up with an April 26 filing, asking the court for temporary measures suspending its obligations under Articles 2, 3, and 4 of the Commission’s decision until the General Court delivers its judgment on the main action.
Belgium argued that suspension of the decision was warranted because the legal uncertainty caused by enforcing Commission’s decision would cause irreparable damage to the Belgian economy as some undertakings could decide to leave or no longer invest in Belgium.
Further, Belgium said that immediate recovery under the Commission decision would create excessive administrative burdens to Belgium’s tax administration, which would need to compute and collect the tax and also defend against legal proceedings brought by companies contesting the recovery.
The EU General Court, in its decision, rejected Belgium’s application for temporary measures, though, stating that Belgium failed to prove exceptional circumstances or urgency justifying suspension of the recovery of the alleged State aid.
Belgium did not establish an accurate and comprehensive picture of the economic harm claimed and excessive burdens to which the tax authorities would be exposed, the Court said.
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