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European Commission - Statement

Statement by Commissioner Vestager on the opening of an in-depth investigation into the Belgian excess profit ruling system

03 February 2015

***Check against delivery***

Today, we have opened another State aid investigation into the deals that EU tax authorities offer to certain companies – most notably to multinational corporations – that may go against EU state aid rules.

This investigation will look into a system of tax exemptions offered by the Belgian tax administration through so-called “excess-profit tax rulings”.

These are tax rulings that multinational groups can benefit from but are neither available to Belgian groups nor to stand-alone companies. They seem to allow a few multinationals groups to pay no taxes on large parts of their profits, without any valid justification under taxation principles.

It also appears that the deals are only struck with companies that move substantial parts of their business to Belgium.

To be clear, this is just our preliminary view. However, if our in-depth investigation confirms it, we would be looking at a scheme benefitting only a selected group of multinational companies.

Let me briefly sketch how the system works.

Belgium claims that the system is justified under the arm's length principle and the OECD rules aimed at avoiding double taxation.

The reasoning continues that in line with the arm’s length principle each company of a multinational should be taxed as if it were independent, any additional profits should not be taxed in Belgium and are therefore exempted from corporate taxation. You can read all the details in the decision once we clear it of business-confidential details.

We have concerns about this claim and our investigation will examine it carefully.

For one thing, it seems to us that the tax rulings overestimate the benefits of belonging to a multinational group – and therefore the alleged excess profit. From what we have seen, the tax discounts typically amount to over 50 percent of the profits covered by the tax ruling – and in some cases to as much as 90 percent.

Moreover, at this point we are not convinced that the system can be justified by the need to avoid double taxation. So far we have not seen any evidence that Belgian tax authorities approve the deductions because another EU country has made a corresponding tax claim.

In sum, I am launching this probe because it seems at this stage that certain multinationals end up paying taxes only on parts of their taxable profits in Belgium, without it being justified under taxation principles, while everyone else pays their dues in full. If confirmed this would obviously be unfair and a distortion of competition.

I would like to make two points clear before I take your questions.

First, our efforts tackle distortions of competition through selective tax advantages. In this case, we are not just targeting specific companies but the benefits are granted as part of a scheme. This shows that we are looking into the tax practices in EU countries and not only at what specific companies are doing. As you know, I have recently asked all EU Member States to give us information on how they use tax rulings, if they do, and we will assess the situation in every one of them.

This also gives me the opportunity to again state clearly that tax rulings as such are not problematic. They may be a legitimate way to create legal certainty but if they are used to establish tax havens or to give benefits to businesses in a selective way, this would not be permissible under EU state aid rules.

Finally, these investigations are not an attempt to harmonise tax policy by the back door. Taking steps towards a more harmonised tax policy would be an issue for the European Parliament and the EU Council to consider, and for the Commission to propose. This is in the hands of my colleague Commissioner Moscovici, with whom I am in close cooperation. Of course I fully support his actions but my task is different - as Competition Commissioner I take corrective measures whilst he is in charge of proposing legislative, preventive measures when it comes to taking action against tax avoidance – And certainly, the preventive and corrective arms can work together to provide a "very warm hug" to those that engage in aggressive tax planning.


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