On 3 February 2015, the EC announced that it has opened a formal investigation into tax ruling practices in Belgium. This case is looking at rulings which allow multinational entities in Belgium to reduce their corporate tax liability by "excess profits" that allegedly result from the advantage of being part of a multinational group. The concern is that this is selective and therefore gives rise to State aid granted by Belgium to those companies, which might therefore have to be repaid.
The EC noted that these tax rulings are often granted to companies that have relocated a substantial part of their activities to Belgium or that have made significant investments in Belgium. Further, according to the EC, this scheme appears to benefit only multinational groups, whilst Belgian companies active only in Belgium cannot claim similar benefits (thus it is selective).
The EC is looking at tax ruling practices EU-wide, and formal investigations into similar issues have already been opened in relation to Ireland, the Netherlands and Luxembourg. The Belgian case is different, however, as it appears to be a general investigation, as opposed to one looking at rulings favouring individual companies.
The case shows that the EC continues to expand its tax State aid investigations. This issue will run and run, and any company active in the EU would be well-advised to consider the potential impact. Separately, the European Parliament has established a “special committee” to conduct a general probe into tax evasion and fraud in the EU.