The European Commission ("Commission") has opened a fifth formal State aid investigation into national tax rulings. This investigation concerns the Belgian "excess profit" provision, which allows multinational groups to reduce their corporate tax liabilities. This investigation differs from the four existing investigations under the Commission tax probe in that it concerns the underlying tax provision which is applied through tax rulings, rather than specific rulings concerning individual companies (i.e., Apple in Ireland, Starbucks in the Netherlands, and Fiat and Amazon in Luxembourg). These first four investigations are expected to be concluded in the coming months. Meanwhile the Commission may yet expand its probe to other Member States: it recently requested a list of all tax rulings issued by every Member State between 2010 and 2013. When the probe was first opened it had focused its requests on Belgium, Cyprus, Ireland, Luxembourg, Malta, the Netherlands and the UK.
The Belgian investigation
The tax provision under investigation is Article 185, §2 of the Income Tax Code (Code des Impôts sur les Revenus / Wetboek Inkomstenbelastingen), by which a company's tax can be reduced by so-called "excess profits", which are profits registered in the accounts of the Belgian entity that allegedly result from the advantage of being part of a multinational group.
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