Luxembourg: European Court’s decision endorses Belgium’s favourable tax schemes on international conglomerates

At least thirty multinational conglomerates were befitted from a recent judicial overturn of an E.U. directive ordering Brussels to revoke tax concessions. The European Commission had initiated proceedings against Belgian financial authorities on the grounds that their corporate taxation systems provided unfair aid to multinational conglomerates with registered offices in Belgium.

The General Court of the E.U. Court of Justice (EUCJ) issued a negative decision claiming that the European Commission did not present concrete evidence to substantiate allegations of Belgium’s favourable tax schemes towards international conglomerates. Legal proceedings were initiated in 2016 by the E.U. Competition Commissioner Margrethe Vestager, after the Brussels government declined the Commission’s request to seek €700 million compensation from multinational corporations with registered offices in Belgium.

The benefitted companies from the European Court’s decision entail among others the British energy conglomerate BP, the German chemicals company BASF, the Swedish industrial tools manufacturer Atlas Copco and the state-owned Belgian telecommunications provider Proximus Group. The European Commission is expected to return to the dispute, with the filing of new cases against individual companies this time.

Interestingly, it is the first time the European Court overturns preceding decisions on favourable taxation schemes. In precedent cases, Ireland was requested to receive €13 billion compensation from Apple, Luxembourg received €250 million reimbursement fees from Amazon, while the Netherlands are trying to recover €30 million from Starbucks.

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