EC Orders Belgium To Recoup Money Lost In Illegal Tax Breaks

As part of a crackdown on generous tax incentives across the European Union, in January the European Commission (EC) demanded Belgium claw back €700 million ($762 million) in tax breaks from at least 35 European firms.

The tax breaks have been equated to illegal state aid.

A so-called “excess profit” scheme in Belgium allows for special treatment of profits by some multinational companies. The tax loophole, which has existed since 2005, enables companies to slash their taxes by as much as 90% by claiming alleged group efficiencies. “The result is double nontaxation, as this excess profit is actual recorded profit, which ends up not being taxed anywhere,” EU competition commissioner Margrethe Vestager stated.

The EC did not publish the names of the 35 companies involved and only stated that they were mostly European groups. However, Belgium media have cited names such as brewing company Anheuser-Busch InBev, chemicals manufacturer BASF, telecoms company Proximus, manufacturing company Atlas Copco, Wabco Holdings—a component supplier for commercial vehicles—and men’s apparel company Celio France, among others. Belgian authorities say that recovering the money from these companies will be a logistical nightmare.