EU and Competition Investigation of Special Tax Rulings

EU fair competition policy ironically might just make a dent in the special or secret tax deals given to multi-nationals that tax policy has so far been powerless to stop. The essence of the special deals, or scams as some see them, are basically the same. The fine details change depending on the facts, or are just window dressing as some see it. In return for a small slice of a special tax deal one EU country attracts to itself a multi-national’s tax affairs which it would never otherwise see. The cost is paid for by the other EU country where the big profits are really made but not taxed and small business in both countries. All fine as a reading, or abuse as some see it, of EU tax law. The trouble is it all falls foul of EU fair competition rules which prohibit special subsidies or behind the scenes state aid. This week the EU Competition Commissioner Margrethe Vestager announced an investigation of special excess-profits tax rulings given by Belgium to multi-nationals. The EU preliminary view that in return for a multi-national moving parts of its business to Belgium it can get a tax discount of from 50% up to 90% of profits. Her view is that “.. tax rulings as such are not problematic. They may be a legitimate way to create legal certainty but if they are used to establish tax havens or to give benefits to businesses in a selective way, this would not be permissible under EU state aid rules.”

Eamon McNicholas
Tax Barrister, Accountant


About Eamon McNicholas

Tax Barrister, Accountant
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