Court Win for EU Regulators Over Crackdown on $825 Million Belgium Tax Scheme

By Reuters
September 16, 2021 Updated: September 16, 2021

LUXEMBOURG—EU competition regulators secured a big win on Thursday when Europe’s top court backed their crackdown on Belgium’s 700-million-euro ($825-million) tax scheme for Magnetrol, BP and more than 30 other multinationals.

European competition chief Margrethe Vestager launched a fight against sweetheart tax deals nearly a decade ago. She has won three cases at a lower tribunal but lost two, including an order to iPhone maker Apple to pay 13 billion euros ($15.3 billion) in Irish back taxes which was dismissed by the tribunal last year.

The European Union executive, the European Commission, ordered Belgium in 2016 to recover some 700 million euros from companies which benefited from the scheme. These included U.S. manufacturer Magnetrol, oil company BP, chemical producer BASF, Wabco, Cellio, Atlas Copco and Belgacom, now Proximus.

The EU competition watchdog said the series of tax rulings given to the companies constituted an aid scheme.

The EU Court of Justice (CJEU) agreed with the Commission’s arguments, saying the General Court, which in 2019 annulled the Commission’s decision, had made several legal errors.

“The Commission correctly found that there was an aid scheme,” judges said.

They said the regulator’s sample of 22 tax rulings from a total of 66 was enough to show a systematic approach by Belgian authorities.

The final verdict in the case will still take some time, said Koen Platteau, a partner at law firm Simmons + Simmons.

“This is not the end of the judicial review process since the case is now referred back to the General Court which will have to decide on the other arguments invoked by Belgium, including on the existence of state aid,” he said.

Judges referred the case back to the lower tribunal, telling it to examine whether the scheme can be classified as state aid and whether regulators were correct to order the recovery of the aid.

Following the General Court ruling, the Commission in 2019 opened separate investigations into 39 companies which benefited from the Belgian tax rulings while also appealing the judgment.

Other ongoing EU cases include Ikea and Nike’s Dutch tax affairs and Luxembourg’s tax treatment of Finnish company Huhtamaki.

The case is C-337/19 P Commission v Belgium and Magnetrol International.

($1 = 0.8482 euros)

By Foo Yun Chee and Marine Strauss