By Julie Martin, MNE Tax
The European Commission today announced that it has opened 39 in-depth investigations to assess whether Belgian “excess profit” tax rulings granted to multinationals between 2005 and 2014 provided benefits that are contrary to EU State aid rules.
The investigations follow the European General Court’s February annulment of a January 2016 EU Commission decision contesting the same tax exemptions granted by Belgium through tax rulings. The General Court had determined that the Commission wrongly concluded that the Belgian tax rules relating to the excess profit of multinational companies constituted an aid scheme.
In today’s action, the Commission is investigating the same Belgian arrangements. This time, to overcome the Court’s objections, the compatibility of the tax rulings with the EU State aid rules will be assessed individually rather than assessed as part of the scheme, the Commission said.
“We are concerned that the Belgian “excess profit” tax system granted substantial tax reductions only to certain multinational companies that would not be available to companies in a comparable situation. Following the General Court’s guidance, we have decided to open separate State aid investigations to assess the tax rulings,” EU Competition Commissioner Margrethe Vestager said.
The private rulings allowed a reduction in the corporate tax base of the companies by between 50% and 90%. The discount was attributed to the so-called “excess profits” that allegedly result from being part of a multinational group.
Under the Belgian excess profit rules, the hypothetical average profit that a standalone company carrying out comparable activities is subtracted from the profit actually recorded by the group.
The Commission said that its preliminary view is that by discounting “excess profit” from the beneficiary companies’ tax base, the tax rulings under investigation selectively misapplied the Belgian income tax code.
The excess profit tax rulings mostly involve European headquartered groups, the Commission said.
Excess profits tax rulings under investigation were granted by Belgium to the following companies: Luciad NV, BASF Antwerpen NV, EVAL Europe NV, BP Aromatics Limited NV, The Heating Company BVBA, British American Tobacco Coordination Center VOF, Evonik Oxeno Antwerpen NV and “NewCo”, Nomacorc SA, Delta Light NV, Henkel Electronic Materials (Belgium) NV, Puratos NV, Omega Pharma International NV, LMS International NV, Noble International Europe BVBA, Trane BVBA, VF Europe BVBA, St. Jude Medical Coordination Center BVBA, Soudal NV, Ontex BVBA, Atlas Copco Airpower NV, Belgacom International Carrier Services NV, Dow Corning Europe NV/SA, Capsugel Belgium NV, Kinepolis Group NV, Pfizer Animal Health SA / Zoetis Belgium SA, Anheuser-Busch Inbev NV / Ampar BVBA, Flir Systems Trading Belgium BVBA, Wabco Europe BVBA, Celio International NV/SA, Magnetrol International NV, Ansell Healthcare Europe NV, Esko-Graphics BVBA, Victaulic Europe BVBA, Astra Sweets NV, Mayekawa Europe NV, Tekelec International SPRL, Bridgestone Europe NV, Chep Equipment Pooling NV, and Knauf Insulation SPRL
Julie Martin
Julie Martin is the founder of MNE Tax. She edits the publication and regularly contributes articles on new developments in cross-border business taxation.
Julie has worked as a tax journalist and editor for more than 13 years. Prior to that, she worked as an in-house tax attorney in New York. She also holds an LLM in taxation from New York University School of Law.
Julie can be reached at [email protected].
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