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Belgium ordered to recoup up to €70m in tax

Belgium tax

​Belgium has been told by the European Commission it needs to recoup between €500 million and €700 million from 35 multinational companies, a majority of which have benefited from the country’s fiscal incentive scheme.

There is a perception among experts and analysts that the current scheme is too generous to companies, adding to ongoing concerns that more needs to be done in order to combat corporate tax avoidance across the European Union.

The latest move has come in response to illegal state aid, with the European Commission arguing that Belgium’s ‘sweetheart’ tax deals equated to an illegal subsidy that gave companies an unfair advantage over certain competitors.

The Belgian "fiscal incentive" scheme, first introduced in 2005, had, according to the commission, allowed companies to reduce the tax bill on profits by as much as 90 per cent.

State aid tax cases were previously placed under the microscope in October, with Luxembourg and the Netherlands both ordered to recoup tens of millions of euros from the Italian carmaker Fiat and the US coffee shop chain Starbucks.

Both of those cases are now being appealed.

According to Margrethe Vestager, EU competition chief, most of the businesses to benefit from the scheme were European, rejecting accusations that authorities were subsequently turning a blind eye to illegal practices carried out by American counterparts.

A crackdown on US companies has led to the launch of several high-profile investigations into American companies operating in the EU, including Amazon’s tax planning in Luxembourg and Apple’s dealings in Ireland.

Decisions on both cases are expected over the coming months, but this latest ruling suggests EU authorities have not completely turned their attention away from European-based corporations, although pressure remains on the EU to ensure tax campaigns keep the same level of pressure on companies on both sides of the Atlantic.

Ms Vestager said: "National tax authorities cannot give any company, however large, however powerful, an unfair competitive advantage compared to others."

"If a country gives certain multinationals illegal tax benefits that allow them to avoid paying taxes on the majority of their actual profits, it seriously harms fair competition in the EU, ultimately at the expense of EU citizens."

But the move, which has affected several high-profile companies across the EU, has largely been met with disappointment.

A spokesperson for ABInBev said: “While we are disappointed by this decision, we remain confident that our tax rulings are in full compliance with the EU jurisprudence on state aid and that we have always complied with Belgian and international tax provisions. We will consider our options, taking into account the reactions by the Belgian authorities."