Belgium to appeal ruling on tax deals for multinationals

The federal government has lodged an appeal against a ruling by the European Commission that ordered the government to recover up to €942 million in tax advantages granted to multinationals. The Commission judged the tax breaks to be state aid to industry, which is illegal.

The ruling concerned so-called excess profits, an arrangement that allowed a multinational to write off a part of its taxable income in Belgium, deemed to have been created by the company’s international standing, reputation, know-how and expertise. Agreements were reached with 60 multinationals; the Commission’s decision related to only 35. The system, in any case, was abandoned last year.

The rulings were, the Commission said, the equivalent of state aid and represented a distortion of fair competition, since smaller companies had no access to such an advantage. In January, federal finance minister Johan Van Overtveldt said he would seek a compromise from competition commissioner Margrethe Vestager and look into the possibility of an appeal. The government has now gone ahead with the appeal.

The case will be heard by the European Court of Justice in Luxembourg, and one of the first moves by the government will be to seek a suspension of the repayment order until the court has heard the case, which could take years.

Photo courtesy BP