The Belgian tax beneficial regime for multinationals is not illegal state aid, says European Court of Justice. It does not mean that the European Commission still the companies can individually tackle.
The European Court of Justice decided this morning that the system of our so-called” excess profit rulings , no illegal state aid. A line through the account of the European Commissioner Margrethe …
The European Court of Justice decided this morning that the system of our so-called” excess profit rulings , no illegal state aid. A line through the account of the European Commissioner Margrethe Vestager in Europe-a grim fight against this kind of tax favourable regulations for multinational corporations. But that does not mean that the Belgian multinationals have already feathered their nests. The Commission can still appeal against the decision or decide her arrows to focus on individual companies.
What are those ‘excess profit rulings’?
It comes to a tax beneficial regime, introduced in 2004, under the purple government of Guy Verhofstadt (Open VLD) to large companies to our country to lure. It offered companies the opportunity with the tax authorities to make appointments to a share of their profits – the so-called rent – no taxes to pay. It is sometimes claimed that the whole system out of the sleeve of Isabel Verlinden, partner of PwC, one of the largest tax consulting firms. “That being said, yes,” she said about that earlier in The Standard. ‘I am, therefore, now a naughty or what?’
The scheme is based on the idea that a company that is part of an international group of more profits than a similar company that only active in Belgium. For example, because of the international company can rely on know-how from the group, can take advantage of the international presence … That so-called increase was in Belgium, no load to remain after an appointment with the tax authorities. And because those rulings secret remained, was that profit, in no other country is taxed.
Why does the European Court have no hesitation in that ruling?
The European Commission is seeking tax regimes to address because they are supposedly illegal state aid would be. The Commission tried hard to create that in our country a system gold with multinationals automatically of that beneficial regime could enjoy. That automaticity is, according to the Court of Justice is not proven because the tax administration is still a lot of room to move kept about the award of the benefit and the size of the benefit.
Was that system often used?
BASF was the first company in our country an excess profit ruling closed. “Thanks to the beneficial regime we have in a few cases, the consent of the parent company received in Belgium a much larger investment to do so, we also could produce for countries outside Europe,” said BASF-ceo Wouter De Geest about it.
The European Court of Justice speaks in its judgment on 55 beneficiaries. The taxman himself had in 2014 about 60 belastingdeals. Since the European Commission published its research in 2015, started, were, however, no new deals more closed. Meanwhile, for a few years, more than 700 million euros of that companies on a blocked bank account, pending a definitive ruling on the system.
What are the consequences of this judgment?
“This is a major setback for the European Commission”, says Johan Langerock (Oxfam), that the file follows. “The question is what this decision means for other tax favourable regulations for the Commission under fire has been made.” It is more about the fiscal aid, which, for example, Starbucks in the Netherlands enjoy, Apple in Ireland and Amazon in Luxembourg.
Also here, the Commission seeks the tax favourable regulations for to address via the detour of illegal state aid. With this difference that the Commission, in our country an entire system of state aid wanted to tackle, while in other countries each time the tax favor to an individual company”.
It is now wait and see whether the Commission will appeal the decision of the European Court. Are they not doing that, then it is not excluded that the Commission, individual companies separately reporting on accusations of illegal state aid.