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European court rules that Belgium’s ‘sweetheart’ tax scheme is not state aid - exposes cracks in broken tax system

Added 14 Feb 2019

Brussels, 14 February 2019 - Today, the European Court of Justice ruled against the European Commission, which had alleged that the Belgian tax scheme, known as the ‘excess profit scheme,’ provided illegal state aid worth around €700 million to multinational corporations.

The Belgian tax scheme allowed selected multinational corporations to discount large parts of their profits when paying corporate tax in Belgium. It has existed since 2005, and came into the spotlight in 2015, when the European Commission opened a state aid investigation. In 2016, the Commission requested that Belgium reclaim around €700 million from multinational corporations in what the Commission found to be illegal state aid. Today, the European Court of Justice rules against the Commission’s finding.

It’s highly concerning that the court has ruled in favour of Belgium’s dubious tax scheme. This case illustrates how some EU governments are giving special ’sweetheart’ tax deals, which allow multinational corporations to lower their tax payments with hundreds of millions of Euros. Today’s court ruling shows that with the current rules, it can be extremely difficult to stop it. It is a stark reminder that state aid rules can’t compensate for a broken tax system. If we want to make sure that multinational corporations pay their share of tax, we need to fix the tax rules.” Tove Maria Ryding, Eurodad Tax Coordinator, said.

Today’s ruling is the first of several. The court is also currently considering tax related state aid cases concerning The Netherlands’ treatment of Starbucks, Luxembourg’s treatment of Fiat, and Ireland’s treatment of Apple. In all of these cases, the Commission has argued that the EU Member States provided illegal state aid to the corporations.

“It impacts us all when multinational corporations avoid large amounts of taxes. It means that our governments have less funding for schools and hospitals, and that small and medium enterprises have to pay higher tax rates than the multinational corporations they’re trying to compete with,” Ms Ryding said.

With a tax system full of loopholes and all information relating to multinational corporations' tax payments being secret, more transparency is desperately needed. “We're all running around in the dark trying to find the companies that exploit the loopholes. What we really need is a rule requiring all multinational companies to publish basic information about where they do business and what taxes they pay in each country where they operate. This would allow all citizens to see which corporations are paying their share of taxes, and which ones are not. The issue is currently on the political agenda of the EU, but some Member States are blocking progress," Ms Ryding concluded.

ENDS

For more information or to organise an interview with Tove Maria Ryding, please contact Marian Blondeel, Communications Manager at Eurodad, on mblondeel@eurodad.org, m: 0032 489 31 58 04.


Notes to editors

Today's decision by the European Court of Justice on the Belgian "Excess profit scheme" can be found here: 

http://curia.europa.eu/juris/document/document.jsf?text=&docid=210761&pageIndex=0&doclang=en&mode=req&dir=&occ=first&part=1&cid=11983288

For more information about the European Commission's state aid case against Belgium, see http://europa.eu/rapid/press-release_IP-16-42_en.htm 

About the European Network on Debt and Development (Eurodad): Eurodad is a network of 47 civil society organisations (CSOs) from 20 European countries. Eurodad works for transformative yet specific changes to global and European policies, institutions, rules and structures to ensure a democratically controlled, environmentally sustainable financial and economic system that works to eradicate poverty and ensure human rights for all.