Belgium will appeal EU decision on excess profits

Summary

The federal government is seeking legal advice to prepare an appeal against the EU’s decision that it must reclaim €700 million in tax breaks given to large companies

“State aid”

The federal government is planning an appeal against a ruling by the European Commission that a tax plan for multinationals counted as illegal state aid. The Commission’s decision would mean the government having to ask for €700 million back from the companies involved.

The problem has been created by the excess profit ruling, which allows a multinational company to deduct part of its income in Belgium as the fruits of its multinational character. In agreement with the tax authorities, the companies were allowed to pay less tax than normal.

The measure was intended to attract inward investment and create jobs, but the Commission sees it as state aid, something that is illegal under EU law. Some of the companies involved – which include brewer AB InBev, tools manufacturer Atlas Copco and cinema chain Kinepolis – have made it clear they might not have invested in Belgium without the tax bonus.

The finance ministry will now retain legal representation to determine the grounds of the appeal. The first job is to find out if filing an appeal suspends the process by which the money has to be reclaimed. While the Commission says not, finance minister Johan Van Overveldt (pictured) says it remains to be seen.

Photo courtesy N-VA

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