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EU wants Belgium to return 700 million euros from unpaid taxes

Staff writer |
The European Commission has concluded that selective tax advantages granted by Belgium under its "excess profit" tax scheme are illegal under EU state aid rules.

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The scheme has benefitted at least 35 multinationals mainly from the EU, who must now return unpaid taxes to Belgium.

The Belgian "excess profit" tax scheme, applicable since 2005, allowed certain multinational group companies to pay substantially less tax in Belgium on the basis of tax rulings.

The scheme reduced the corporate tax base of the companies by between 50% and 90% to discount for so-called "excess profits" that allegedly result from being part of a multinational group.

The Commission's in-depth investigation opened in February 2015 showed that the scheme derogated from normal practice under Belgian company tax rules and the so-called "arm's length principle". This is illegal under EU state aid rules.

Commissioner Margrethe Vestager, in charge of competition policy, stated: "Belgium has given a select number of multinationals substantial tax advantages that break EU state aid rules. It distorts competition on the merits by putting smaller competitors who are not multinational on an unequal footing.

There are many legal ways for EU countries to subsidise investment and many good reasons to invest in the EU. However, if a country gives certain multinationals illegal tax benefits that allow them to avoid paying taxes on the majority of their actual profits, it seriously harms fair competition in the EU, ultimately at the expense of EU citizens."

The "excess profit" tax scheme was marketed by the tax authority under the logo "Only in Belgium". It only benefitted certain multinational groups who were granted a tax ruling on the basis of the scheme, whilst stand-alone companies (i.e. companies that are not part of groups) only active in Belgium could not claim similar benefits. The scheme represents a very serious distortion of competition within the EU's Single Market affecting a wide variety of economic sectors.

The multinational companies benefitting from the scheme are mainly European companies, who also avoided the majority of the taxes under the scheme. The Commission estimates the total amount to be recovered from the companies to be around €700 million.

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