EU cracks down on corporate tax avoidance in Belgium

The European Commission has ordered Belgium to recover €700 million from 35 large companies in back taxes in the EU executive’s biggest move yet to crack down on tax avoidance by multinationals.

The Commission said Belgium’s “excess profit” tax system, whereby multinationals’ economies of scale can enable them to reduce their tax bases by up to 90 per cent, was illegal because it had been granted to a select number of large companies but not to smaller firms, distorting competition.
The companies involved were not named but the Commission said they were mostly European corporations and that they would pay back around €500 million of the amount due.

The Commission has faced accusations of a bias in its investigations against non-EU companies, notably US tech giants, as it investigates tax practices across the EU.

In October it ruled that Starbucks Corp. and Fiat Chrysler Automobiles NV benefited from illegal tax deals with the Dutch and Luxembourg authorities ordering each country to recover €20-30 million in back taxes.

It is also investigating the tax arrangements of Amazon in Luxembourg and Apple in Ireland.

Belgian Finance Minister Johan Van Overtveldt said the ruling was in line with expectations and that the “excess profit” system, introduced in 2005, had been on hold since February 2015, when the investigation began.

Belgium kept all options open, including a possible appeal, he said.

Belgian tax authority rulings, typically for four years, were often granted to companies that had relocated a substantial part of their activities to Belgium or that made significant investments there.