The European Commission has ordered the repayment of an estimated €700m in unpaid tax from 35 multinational companies which were deemed to have been granted selective tax advantages by the Belgian government. This so-called ‘excess profit’ tax scheme was declared illegal under EU state aid rules yesterday, and the companies involved must now return the unpaid taxes.
The Commission determined that Belgium, by allowing certain multinational companies to reduce their corporate tax base by between 50-90%, has distorted competition in a way that favours large multinational companies over their smaller, domestic competitors.
This latest ruling comes on the back of rulings against Starbucks in the Netherlands and Fiat in Luxembourg at a time when Pierre Moscovici, European Commissioner for Economic and Financial Affairs is calling for 2016 to be “the year of tax reform and fiscal transparency”.
This is a landmark decision as the figures involved - €700 million from some 35 companies – are enormous. This should send a strong warning to governments and companies alike, that we don’t have a real ‘single market’ in the EU when some companies can reduce their tax bill to almost nothing, while small local businesses dutifully pay their fair share.
We need Commissioner Moscovici and others to come up with an ambitious Anti-Tax Avoidance Package later this month. The Commission should take as its starting point the recommendations proposed in my report, approved last month. That includes getting large multinational companies to report to the public exactly where they make their profits and where they pay their taxes.
I have been calling for action in this area repeatedly, ever since I met the Belgian authorities as part of the Parliament's Special Tax Committee – and I am really glad to see that the Commission has taken that action. Coming on top of the decisions against Starbucks and Fiat, this goes to show that European citizens will not accept companies avoiding paying their fair share of tax, or governments helping them get away with it.