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Belgium - Decision of the EU General Court in European Commission vs. Belgium, Case T 131/16 RENV

Dated 16 September, 2023


Between 2004 and 2014, Belgium allowed certain multinational group members to reduce their taxable basis, reasoning that the profits attributed to foreign entities should not be taxed in Belgium. The European Commission, in 2016, argued that this was essentially a partial tax break and deemed it illegal state aid. Belgium and the benefiting companies appealed stating these were measures for the creation of jobs, investments, etc., In 2019, the General Court initially decided in Belgium’s favor, saying the Commission had not proven it was a systematic "scheme" rather than individual measures. However, in 2021, the Court of Justice overturned that decision, affirming that it indeed was a state aid scheme, and asked the General Court to determine if this scheme was unlawful aid.

In its 2023 judgments, the General Court sided with the Commission, pointing out several key reasons:

  1. The "Excess Profit Rulings (EPRs)" deviated from the standard Belgian corporate tax system, which is to tax all profits recorded in Belgium.

  2. The EPRs were selective; they favored multinational group entities while other Belgian tax resident entities could not benefit from such reductions.

  3. The scheme also did not consider companies not investing or creating jobs in Belgium, nor was it available to companies’ part of a small group.

  4. Given the EPRs did not align with the typical Belgian tax laws, they provided an unfair advantage to their recipients.

In conclusion, the General Court agreed with the European Commission that the system in question did qualify as State aid and was, therefore, illegal.

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