The European Commission has announced that its current view is that Belgium’s excess profits tax ruling system provides for a selective advantage tantamount to State aid, and has requested stakeholder comments on this determination by July 5.
According to the Commission, about 50 companies have used the program to reduce their corporate tax base by the “excess profits” that allegedly result from the advantage of being part of a multinational group.
Belgian tax authorities argue that each company of a multinational group should be taxed as if it was independent, and that any excess profits should not be taxed in Belgium and are thus exempt from corporate taxation. According to the Commission, though, Belgium’s ruling scheme “relies on an inappropriate and unduly favourable reading of the arm’s length principle and the OECD transfer pricing rules.”
The Commission opened the state aid investigation February 3, noting that deductions granted through Belgium’s ruling system usually amount to more than 50 percent and sometimes up to 90 percent of the company’s profits.
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