Commission Decision (EU) 2016/1699
of 11 January 2016
on the excess profit exemption State aid scheme SA.37667 (2015/C) (ex 2015/NN) implemented by Belgium
(notified under document C(2015) 9837)
(Only the Dutch and French texts are authentic)
(Text with EEA relevance)
THE EUROPEAN COMMISSION,
Having regard to the Treaty on the Functioning of the European Union, and in particular the first subparagraph of Article 108(2) thereof,
Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,
Whereas:
By letter of 19 December 2013, the Commission requested Belgium to provide information on the so-called ‘excess profit tax ruling system’ (hereinafter: the ‘Excess Profit exemption’ or the ‘contested scheme’) which is based on Article 185(2)(b) of the Belgian Income Tax Code 1992 (‘Code des Impôts sur les revenus 1992’ in French or ‘Wetboek van Inkomstenbelastingen 1992’ in Dutch, hereinafter: ‘WIB 92’). The Commission also requested a list of rulings concerning the application of the Excess Profit exemption.
By letter of 21 January 2014, Belgium replied to the questions of the Commission's request for information, but did not provide the Commission with the requested list of rulings, indicating that providing such a list would require more time.
On 21 February 2014, the Commission sent follow-up questions and repeated its request for a list of rulings. For the rulings issued in 2004, 2007, 2010 and 2013 under the contested scheme, the Commission also requested the full text of the rulings as well as the applications requesting those rulings, plus their annexes, and — where applicable — subsequent correspondence related to those requests.
On 18 March 2014, Belgium responded to the Commission's follow-up questions and provided the individual rulings requested, including applications, annexes and further correspondence related to the granting of those rulings.
By letter of 28 July 2014, the Commission indicated that the Excess Profit exemption could represent incompatible State aid. The Commission also requested more information about a number of individual rulings. By letters of 1 September and 4 November 2014, Belgium replied to the request of 28 July 2014.
On 25 September 2014, a meeting was held between the Commission services and the Belgian authorities.
By letter of 3 February 2015, the Commission informed Belgium that it had decided to initiate the procedure laid down in Article 108(2) of the Treaty in respect of the Excess Profit exemption (hereinafter: the ‘Opening Decision’).
On 29 May 2015, following a request for a deadline extension, Belgium submitted its comments to the Opening Decision.
On 1 and 2 July 2015, interested parties submitted comments on the Opening Decision, which were forwarded to the Belgian authorities. On 14 September 2015, Belgium informed the Commission that it had no intention to make any observations on those comments.
By letter of 16 September 2015, the Commission requested Belgium to further substantiate certain points made in their written comments of 29 May 2015 on the Opening Decision. Belgium replied to that request by letter of 16 October 2015.
On 20 October 2015 and 7 December 2015, meetings took place between the Commission services and the Belgian authorities.
First, the arm's length prices charged in transactions between the Belgian group entity and its associated enterprises are fixed based on a transfer pricing report provided by the taxpayer. The Belgian group entity is identified as the ‘central entrepreneur’ in that relationship and is accordingly left with the residual profit from those transactions.
Second, according to Belgium the residual profit should not be seen as the Belgian group entity's arm's length profit, as it may exceed the profit that a comparable standalone company would have made in circumstances similar to those of the entity without being part of a multinational group. Therefore, that ‘excess profit’ is established on the basis of a second report submitted by the taxpayer as part of its ruling request under the contested scheme and exempted from taxation.
The Belgian authorities claim that the projected commercial results of those entities benefitting from the contested scheme are evaluated against their profit actually recorded after three years. The agreed percentage can then be adjusted if required by that evaluation. However, there is no indication that such an evaluation has ever actually resulted in an adjustment of the agreed discount percentage in any of the cases reviewed by the Commission.
Because a ruling is required to obtain the benefit of the Excess Profit exemption and because a ruling can only be delivered for profit derived from a new situation, the advantage that a multinational group obtains from the contested scheme is conditioned upon the relocation or increase of its activities in Belgium and is proportional to the importance of the new activities and profit created in Belgium. The rulings issued under the contested scheme that were examined by the Commission invariably concern changes in the organisational structure of the multinational group where the description of the key facts in the ruling request underlines the planning of a relocation of activities to Belgium, new investments to be made and the creation of new jobs in Belgium.
In sum, Belgian group entities that have obtained a ruling under the contested scheme may apply an annual pro-active downward adjustment of their corporate income tax base through the exemption of alleged ‘excess profit’ from their profit actually recorded on the basis of Article 185(2)(b) WIB 92. In other words, Belgium considers that this excess profit should not be attributed to the Belgian group entity and should therefore be excluded from its Belgian tax base in accordance with Article 185(2)(b) WIB 92. Consequently, a Belgian group entity benefitting from the Excess Profit exemption is taxed on an amount resulting from the difference between its profit actually recorded and its ‘excess profit’.
The WIB 92 establishes the rules for the taxation of income by Belgium. Article 1 defines four income taxes which cover taxation of income of natural persons (Title II: Articles 3 to 178), resident companies (Title III: Articles 179 to 219), other legal persons (Title IV: Articles to 226) and non-resident taxpayers — natural persons, companies, other legal persons (Title V: Articles 227 to 248/3).
Article 183 WIB 92 states that the income subject to tax according to Title III (for resident companies) is of the same type as that subject to Title II (for natural persons) and that the taxable amount is established following the rules applicable to profit. Article 24 WIB 92 clarifies that the taxable income of industrial, commercial and agricultural undertakings includes all income from entrepreneurial activities such as ‘profit from all the operations handled by those undertakings or through their intermediation’ as well as ‘profit from all increases in value of their assets or decrease in value of their liabilities when that profit has been realised and registered in the accounts’.
Article 185(1) WIB 92 provides that companies are taxed on the total amount of their profit before distribution. Read in conjunction with Article 1, Article 24 and Article 183 WIB 92, this means that the taxable profit under Belgian tax law should at least include — as a starting point and notwithstanding possible subsequent upward/downward adjustments — the total profit registered in the taxpayer's accounts.
Indeed, the establishment of the tax base under the Belgian income tax code relies on the profit actually recorded in the taxpayer's accounts as a starting point. A number of upward adjustments (such as non-deductible expenses) or downward adjustments (such as partial exemption of certain dividends received, deduction of losses carried forward, tax incentives) can be applied at subsequent steps in the establishment of the tax base. For each of those operations, taxpayers must provide information to the tax administration through their tax return (Form 275.1) and be able to give justifications for those adjustments.
When Belgian tax law provides for a permanent exemption of a part of the profit actually recorded in the taxpayer's accounts as a reserve, an adjustment can notably be reflected in the calculation of the tax base in the first operation of that calculation through a so-called ‘increase of the initial situation of the reserves’.
Therefore, while the tax base may not always equal the net profit actually recorded in the taxpayer's annual accounts because of the adjustments applied to that base for tax purposes, the establishment of the tax base should nevertheless rely on the figures actually recorded in those accounts as a starting point. The establishment of the tax base starts, for instance, with the calculation of the net increase/decrease of the taxable reserves (profit/loss of the year, profit/loss carried forward, other reserved profit, etc.) during the tax year and, whenever justified by the application of tax law provisions or following a tax audit, adjustments and corrections may be applied to the figures recorded in the taxpayer's accounts or mentioned in the taxpayer's tax return.
‘(…), for two companies that are part of a multinational group of associated companies and in respect of their reciprocal cross-border relationships:
- (a)
when two companies are in their commercial and financial relationships linked by conditions agreed upon or imposed on them which are different from those which would have been agreed upon between independent companies, the profit which — under those conditions — would have been made by one of the companies but is not because of those conditions, may be included in the profit of that company.
- (b)
when profit is included in the profit of one company which is already included in the profit of another company and the profit so included is profit which should have been made by that other company if the conditions agreed between the two companies had been those which would have been agreed between independent companies, the profit of the first company is adjusted in an appropriate manner.
The first paragraph applies by way of advance ruling without prejudice to the application of the EU Arbitration Convention or of a Double Tax Treaty.’
Although the wording is different, Article 185(2) WIB 92 is similar to Article 9 of the OECD Model Tax Convention on Income and Capital, which forms the legal basis for transfer pricing adjustments in most treaties agreed between two jurisdictions to prevent the double taxation of income derived by a resident from one of the jurisdictions (hereinafter: ‘Double Tax Treaty’).
The Law of 21 June 2004 also introduced an amendment to Article 235 2o WIB 92 to ensure that the transfer pricing rules established by Article 185(2) WIB 92 apply equally to Belgian permanent establishments of non-resident companies.
As regards the downward adjustment provided for by Article 185(2)(b) WIB 92, the Memorandum explains that that provision seeks to avoid or undo a (potential) problem of double taxation. It further explains that that adjustment shall only apply to the extent that the Ruling Commission considers both the principle and the amount of the primary adjustment justified.
The Memorandum also contains guidance on what is considered a multinational group of associated companies and on the task of the Ruling Commission. In particular, the Memorandum explains that the Ruling Commission shall agree on a methodology which is used, establish functions performed, assets used and risks assumed which are instrumental in determining the tax base.
The Circular refers to the compulsory intervention of the Ruling Commission for downward adjustments and its autonomy to set conditions on a case-by-case basis, which should contribute to efficiency and certainty for taxpayers improving the Belgian investment climate.
The then Minister of Finance replied that, indeed, only requests for a downward adjustment had thus far been received. Moreover, the Minister stated that it is not for Belgium to specify to which country excess profit ought to be attributed and that it is therefore not possible to determine with which country the information on a Belgian downward adjustment should be exchanged.
‘Par décision anticipée, il y a lieu d'entendre l'acte juridique par lequel le Service public fédéral Finances détermine conformément aux dispositions en vigueur comment la loi s'appliquera à une situation ou à une opération particulière qui n'a pas encore produit d'effets sur le plan fiscal.
La décision anticipée ne peut emporter exemption ou modération d'impôt.’
Article 22 of the law defines the circumstances under which a tax ruling cannot be granted, for example when the request concerns situations or operations similar to those having already produced effects from a tax point of view. Article 23 of the law establishes the principle that rulings are binding on the tax administration for the future as well as circumstances in which a tax ruling is not binding on the tax administration. This is the case when it turns out that the ruling is not in conformity with the provisions of the treaties, of Union law or of domestic law.
The application of the arm's length principle is therefore based on a comparison of the conditions in a controlled (intra-group) transaction with the conditions in comparable transactions between independent companies under comparable circumstances so that none of the differences (if any) between the situations being compared could materially affect the conditions examined (e.g. price or margin), or that reasonably accurate adjustments can be made to eliminate the effect of any such differences.
‘The arm's length principle is viewed by some as inherently flawed because the separate entity approach may not always account for the economies of scale and interrelation of diverse activities created by integrated businesses. There are, however, no widely accepted objective criteria for allocating the economies of scale or benefits of integration between associated enterprises’
The authoritative statement of the arm's length principle is found in Article 9 of the OECD Model Tax Convention, which forms the basis of Double Tax Treaties involving OECD member countries including Belgium and an increasing number of non-member countries. Since the flexibility in the arrangement of transfer prices might lead to shifting the tax base from one jurisdiction to another, the authoritative presence of the arm's length principle in Double Tax Treaties serves the purpose of those treaties, i.e. the avoidance of double taxation and the prevention of fiscal evasion.
- Article 9, first paragraph, determines that a Contracting State may increase the tax base of a taxpayer resident in its territory when it believes that the transfer prices applied by it have led to a too low taxable base and allow that State to tax it accordingly. This is referred to as the ‘primary adjustment’ and results in the tax administration increasing the taxable profit reported by a taxpayer33.
- Article 9, second paragraph, aims to prevent that the profit so taxed by the Contracting State making the primary adjustment in accordance with the first paragraph is not also taxed at the level of an associated company resident in the other Contracting State34. It does this by committing that other Contacting State to either decrease the tax base of that associated company with the amount of adjusted profit taxed by the first Contracting State following the primary adjustment or to provide a refund of taxes already collected. Such an adjustment by the other Contacting State is, however, not automatically made. If it considers that the primary adjustment is not justified, either in principle or as regards the amount, it may and usually will refrain from making such an adjustment35.
The downward adjustment by the other Contracting State on the basis of Article 9, second paragraph, is referred to as the ‘corresponding adjustment’ and, when granted, effectively prevents that the same profit is taxed twice.
The TNMM is one of the ‘indirect methods’ to approximate an arm's length pricing of transactions and profit allocation between companies of the same corporate group. It approximates what would be an arm's length profit for a series of controlled transactions or an entire activity, rather than for an identified transaction.
Number of excess profit rulings granted since 2004 | |||||||||||
Year | 2004 | 2005 | 2006 | 2007 | 2008 | 2009 | 2010 | 2011 | 2012 | 2013 | 2014 |
|---|---|---|---|---|---|---|---|---|---|---|---|
No of cases | 0 | 2 | 3 | 5 | 4 | 7 | 6 | 7 | 15 | 9 | 8 |
Source: Belgian Ministry of Finance, per 31 May 2014 | |||||||||||
Belgium has provided key financial data for all 66 rulings granting an Excess Profit exemption (for details see the Annex).
Situations in which the Excess Profit exemption has been granted can be illustrated through the following examples.
As a first example, the ruling request of Company A indicates that the company has the intention to increase its capacity of producing a certain product in its Belgian-plant, while at the same time moving the coordination function (i.e. the so-called central entrepreneurial function) of a foreign subsidiary to Belgium. The request also indicates that Company A would transfer several posts (full time equivalent posts or ‘FTE’) to Belgium. It appears from the ruling that there is no double taxation issue. The ruling indicates that the fact that the accounting profit in Belgium is higher than that of a standalone company is due to e.g. knowhow, procurement advantages, client lists etc., which existed in the group before the central entrepreneurial function was transferred to Belgium. However, the ruling adds that those ‘intangibles’ have been made available to the Belgian group entity by the group for free, which implies that there is no taxable income anywhere else in the group and therefore no risk for double taxation. In fact, the ruling (point 48 thereof) reiterates that ‘it is not up to the Belgian tax authorities to determine which foreign companies' profit accounts must include the excess profit’.
As a second example, the ruling request of Company B reads that the company intends to bring forward its expansion investments in Belgium. Company B claims that the new investment is more attractive for it as a group entity than for a standalone company. The synergies that the ruling refers to relate to advantages which arise in Belgium in the form of lower investment costs because it already has a plant in Belgium, lower operational costs because overhead costs of the site can be spread over a larger production base, and access to cheap energy.
As a third example, the ruling request of Company C describes the company's intention to establish its Belgian subsidiary as the central entrepreneur by way of a restructuring of its European operations. Company C would increase its FTE in Belgium. Belgium again accepts the use of the TNMM with profit before tax obtained by standalone companies in comparable uncontrolled transactions as a profit level indicator to calculate the taxable base of the central entrepreneur. On this basis, Company C obtains a downward adjustment of around 60 % of the net profit before tax.
Having reviewed a sample of 22 individual rulings, the Commission considers these three examples as representative for the entire contested scheme. Although the individual facts, amounts involved and transactions are different for each specific case, they all concern multinationals increasing their activities in Belgium and claiming and obtaining an exemption from their corporate tax base of profit actually recorded in Belgium but allegedly attributable to synergies, economies of scale or some other group-related factor. From the sample, the Commission observed that Excess Profit exemptions were not granted to small companies, nor have the Belgian authorities been able to substantiate their claim that the Excess Profit exemption could also be granted to entities that are part of a small group or for other reasons than the alleged existence of synergies or economies of scale.
- Company D with a balance sheet total of EUR [100-120]43 million, a turnover of EUR [60-80] million and [200-250] FTE's;
Company E with a turnover of EUR [70-90] million and [250-300] FTE's, and
Company F with a balance sheet total of EUR [50-70] million, a turnover of EUR [70-90] million and [350-400] FTE's.
When asked to substantiate the availability of the Excess Profit exemption for other reasons than the alleged existence of synergies or economies of scale, the Belgian authorities provided three examples of transfer pricing rulings in which the Ruling Commission, upon the request of the Belgian group companies, agreed to a corresponding downward adjustment at the level of those companies, on the basis of Article 185(2)(b) WIB 92, as a consequence of a primary upward transfer pricing adjustment to the profits of their associated group companies in Germany, the United Kingdom and Denmark, respectively, made by the German, United Kingdom and Danish tax administrations, respectively.
The present decision does not concern such and other similar genuine corresponding transfer pricing adjustments. It only concerns rulings granting the Excess Profit exemption, which is a unilateral and pro-active reduction of the Belgian tax base without a primary upward transfer pricing adjustment made in another tax jurisdiction or any other indication of the reduced amounts being included in a foreign tax base. For the application of the Excess Profit exemption, the exempted profit does not need to have been taxed or even included in the tax base of another foreign group company. This feature distinguishes Excess Profit exemption rulings from other transfer pricing rulings granted by the Ruling Commission on the basis of Article 185(2)(b) WIB 92 that also allow for a reduction of the profit actually recorded for tax purposes, but where the reduction is the consequence of the actual taxation or a primary upward transfer pricing adjustment by a foreign tax administration.
The Commission decided to initiate the formal investigation procedure because it took the preliminary view that the Excess Profit exemption scheme constitutes a State aid scheme prohibited by Article 107(1) of the Treaty since it is incompatible with the internal market.
Secondly, the Commission took the preliminary view that the contested scheme allows for a selective advantage. The Commission considered that scheme to constitute a derogation from the reference framework since an exemption from corporate income tax liability was granted for a part of realised profit despite the fact that it was actually generated by and recorded in the accounts of the Belgian group entity. The Commission raised further doubts that the recognition of alleged excess profit exempted under the scheme was in line with the arm's length principle, since the recognition of such a separately identifiable profit component is highly questionable and the actual benefits of being part of a multinational group were in any case significantly overestimated.
The Commission also took the preliminary view that the advantage granted by the contested scheme was selective given that it only benefited Belgian entities that are part of a multinational group. Belgian entities that were only active in Belgium could not claim similar benefits. Moreover, the beneficiaries of the scheme usually relocated a substantial part of their activities to Belgium or made significant investments in Belgium.
The Commission further took the preliminary view that the Excess Profit exemption could not be justified by the objective to prevent double taxation, since it did not correspond to a claim from another country to tax the same profit.
With all the other conditions of Article 107(1) of the Treaty being fulfilled and no apparent compatibility ground available, the Commission reached the preliminary conclusion that the Excess Profit exemption scheme constituted a State aid scheme which could not be found compatible with the internal market. On those grounds, the Commission decided to initiate the procedure laid down in Article 108(2) of the Treaty with respect to that scheme.
Belgium submitted comments on the assessment framework applied in the Opening Decision, the non-application of the equality principle and finally held that the Opening Decision contains several misconceptions.
Belgium contests that the combination of Article 185(2) WIB 92, the Circular of 4 July 2006, the annual reports of the Ruling Commission and the analysis of the rulings constitute a scheme meeting the criteria of Article 1(d) of Regulation (EU) 2015/1589. Belgium considers that the analysis as a scheme must be limited to the legal provision, in the absence of a thorough analysis of all rulings granting the Excess Profit exemption. Belgium considers the examples provided in the Opening Decision to be selectively chosen examples providing only superficial findings.
Belgium also holds that it is the only Member State against which the Commission has opened the formal investigation procedure on a ruling scheme instead of an individual case, while the majority of Member States provide for advance tax rulings. Belgium considers this conduct not to comply with the principle of equal treatment.
Belgium states that the Commission assigns too much relevance to the accounting profit of Belgian companies for the identification of the reference framework. Belgian corporate tax law allows or prescribes numerous adjustments, both upward and downward, to arrive from an accounting profit to a taxable profit. According to Belgium, those adjustments, including Article 185(2)(b) WIB 92 are an inherent part of the reference framework and apply to all taxpayers that meet the conditions for the respective adjustments.
Belgium also states that the purpose of Article 185(2)(b) WIB 92 is to prevent double taxation. Since nationally organised groups or standalone entities cannot be confronted with double economic taxation, they are in a different factual and legal situation from multinational companies in the light of the aim pursued by the measure in question. Hence, Article 185(2)(b) WIB 92 is not a derogation to the general tax system.
Belgium states that only arm's length profit can be taxed under its corporate tax system. Moreover, since the Commission has previously accepted the arm's length principle as a principle to assess the presence of an advantage for State aid purposes, a tax ruling can only confer an advantage to a taxpayer if it is in conflict with the arm's length principle.
Belgium argues that excess profit cannot be attributed to the Belgian entities under the separate entity approach that is at the basis of the arm's length principle. Excluding such profit from the tax base of Belgian entities therefore does not confer an advantage. According to Belgium, there is no international consensus on how profit caused by group synergies and/or economies of scale should be attributed to various group entities. Even if an overall non-taxation of excess profit would occur because no other tax jurisdiction taxes the excess profit exempted by Belgium, ensuring the taxation of all profits is not Belgium's responsibility.
Belgium provided a description of the two-step method outlined in recital 15 as a way to determine the profit deducted under the Excess Profit exemption.
Belgium denies any inconsistencies in the selection of the appropriate transfer pricing method or in selecting the tested party. Moreover, according to Belgium any observed inconsistencies cannot be generalised for the assessment of the scheme without a thorough case-by-case analysis of all rulings.
Belgium states that (non-)taxation of excess profit abroad is not its responsibility. Some rulings granting an Excess Profit exemption have been published and some companies are transparent in their annual accounts. Exchanging information is not possible, since it is not for Belgium to decide where excess profit should be attributed to and taxed. If in effect that profit remains wholly untaxed, this is caused by a disparity between Belgian law and foreign law and/or a flaw in the arm's length principle.
Belgium also denies that the relocation of substantial activities to or the creation of investments or jobs in Belgium constitutes an implicit or explicit condition for the application of rulings granting the Excess Profit exemption. According to Belgium, there is no such condition in the law and the Ruling Commission does not have the discretion to set such conditions. It is merely a legal obligation to fully describe activities, factual background and the special situation or arrangement referred to in Article 21 of the Law of 24 December 2002, introducing advance rulings in Belgian tax law.
Belgium considers the Excess Profit exemption justified since it is necessary and proportionate to prevent potential double taxation. Belgium underlines that it is not meant to reduce or remedy actual double taxation.
Comments were submitted by AGC Glass Europe SA/NV on 1 July 2015 and by […] on 3 July 2015. Both companies have received rulings pursuant to Article 185(2)(b) WIB 92.
AGC Glass Europe SA/NV notes in its submission that it has never applied or implemented the ruling that it obtained on the basis of Article 185(2)(b) WIB 92.
The Commission considers the contested measure to constitute an aid scheme within the meaning of Article 1(d) of Regulation (EU) 2015/1589. Pursuant to that provision, a scheme is defined as ‘any act on the basis of which, without further implementing measures being required, individual aid awards may be made to undertakings defined within the act in a general and abstract manner (…)’.
The definition includes three criteria: (i) any act on the basis of which aid can be awarded; (ii) which does not require any further implementing measures; and (iii) which defines the potential aid beneficiaries in a general and abstract manner.
In sum, Article 185(2)(b) WIB 92, the Memorandum, the Circular and the replies by the Minister of Finance to parliamentary questions on the application of Article 185(2)(b) WIB 92 constitute the acts on which basis the Excess Profit exemption is awarded.
The Commission considers the Excess Profit exemption to be granted without further implementing measures being required within the meaning of that provision. The elements necessary to benefit from the Excess Profit exemption can be described in abstracto. The existence of those elements reveal the existence of a consistent approach to granting the aid observed in the sample of rulings reviewed by the Commission and described by Belgium in its comments to the Opening Decision.
to entities of a multinational undertaking;
- which obtain a compulsory prior authorisation via a ruling from the Ruling Commission, as a consequence of which the aid can only be granted for profit related to a new situation which has not yet produced effects from a tax perspective, e.g. a reorganisation leading to the relocation of a central entrepreneur to Belgium, the increase of activities or new investments in Belgium57;
on the profit that they make that exceeds the profit that would be made by comparable standalone entities operating in similar circumstances;
without the need for an initial primary adjustment in another Member State.
Indeed, as indicated in recital 65, the Commission has assessed a sample of 22 individual rulings that can be considered as representative for the contested scheme. Even though the individual facts, amounts involved and transactions are different for each specific ruling, they all concern multinationals of a considerable size, increasing their activities in Belgium, and claiming and obtaining an exemption from their corporate tax base of profit actually recorded in Belgium but allegedly attributable to synergies, economies of scale or some other group related factor.
Contrary to what Belgium has claimed, the fact that the Commission refers to common elements found in a sample of the rulings does not imply that it considers the State aid elements to stem from individual rulings rather than from a scheme. The Commission considers that the rulings are an instrument through which the scheme is applied, as mandated by the law on which the scheme is based, and that the description of certain individual rulings in the Opening Decision only serves as an illustration of how the scheme has been implemented in practice. In any event, the Commission made clear in Section 4.1 of its Opening Decision why it considered, at that stage, that the measure constituted an aid scheme, so that Belgium could not harbour any illusions that the Commission considered the State aid elements to stem from the individual rulings instead of from a scheme.
The fact that the Ruling Commission enjoys a limited margin of discretion to agree the exact percentage of the downward adjustment to the tax base subject to the information provided by the taxpayer or to assess the fulfilment of some of the conditions under which that deduction can be awarded (e.g. the existence of a new situation that has not yet had tax consequences), does not affect that conclusion. Indeed, the existence of a special Ruling Commission with exclusive competence on rulings to assess the reliability of the approximation of the amount of excess profit claimed by the taxpayer under the second step, necessarily requires a limited margin of discretion on the part of the Ruling Commission. However, this merely ensures a consistent application of that exemption.
The Commission therefore concludes that the Excess Profit exemption does not require any further implementing measures.
As for the third criterion, the act on the basis of which the Excess Profit exemption is granted defines the potential beneficiaries in a general and abstract manner. The application of Article 185(2)(b) WIB 92, which forms the legal basis for the rulings necessary to benefit from the exemption, is limited to entities that form part of ‘a multinational group of associated companies’.
According to Article 107(1) of the Treaty, any aid granted by a Member State or through State resources in any form whatsoever which distorts or threatens to distort competition by favouring certain undertakings or the provision of certain goods shall be incompatible with the internal market, in so far as it affects trade between Member States.
As regards the first condition for a finding of State aid, the Excess Profit exemption finds its basis in the application of Article 185(2)(b) WIB 92 and all the guidance documents supporting the interpretation made by the Belgian authorities of that provision for granting that exemption. Moreover, the exemption is granted by means of compulsory advance tax rulings delivered by the Ruling Commission, an organ of the Belgian tax administration, and binding on the Belgian tax administration. Accordingly, the Excess Profit exemption is imputable to the Belgian State.
As regards the second condition for a finding of State aid, the undertakings benefiting from the contested scheme are multinational companies operating in several Member States, so that any aid in their favour is liable to affect intra-Union trade. Moreover, because a ruling to benefit from the exemption can only be granted for profit derived from a new situation, which entails the relocation or increase of the undertaking's activities in Belgium, and because the benefit of the exemption is proportional to the importance of the new activities and profit created by the undertaking in Belgium, the scheme is liable to influence the choices made by multinational groups as to the location of their investments within the Union and thus to affect intra-Union trade.
As regards the third condition for a finding of State aid, the Commission will demonstrate in the following section how the contested scheme confers a selective advantage to the Belgian group entities admitted to that scheme, as well as to the multinational groups to which those entities belong. It does so by applying a unilateral downward adjustment to their tax base resulting in a reduction of their corporate tax liability in Belgium as compared to the taxes those undertakings would otherwise have had to pay under the ordinary system of taxation of corporate profits.
For the purpose of the selectivity analysis a reference system is composed of a consistent set of rules that apply on the basis of objective criteria to all undertakings falling within its scope as defined by its objective.
The Commission does not agree that the Excess Profit exemption is an inherent part of the reference system for the following reasons.
First, the Excess Profit exemption is not prescribed by any provision of the WIB 92. Indeed, the Commission notes that Article 185(2)(b), the provision on the basis of which the Excess Profit exemption is actually granted, refers to specific transactions or arrangements between two related group entities. The non-arm's length character of the conditions agreed for those transactions or arrangements may lead to a transfer pricing adjustment on the basis of that provision, but it does not allow or prescribe an abstract unilateral exemption of a fixed part or percentage of the profit actually recorded by a Belgian entity forming part of a multinational group. Rather, that provision requires the identification of a transaction or arrangement (or series of transactions) with a specific associated foreign group counterparty. Indeed, only Article 185(2)(a) WIB 92, which concerns upward transfer pricing adjustments, allows the Belgian tax administration to make a unilateral primary transfer pricing adjustment if the conditions agreed for a transaction or arrangement differ from those that would have been agreed under arm's length conditions. By contrast, the application of Article 185(2)(b) WIB 92, which concerns downward transfer pricing adjustments, contains the additional condition that the profit from the transaction or arrangement to be exempted must also have been included in the profit of the foreign counterparty to that transaction or arrangement.
Third, the difference in determining the taxable profit of standalone and group companies has no bearing on the objective of the Belgium corporate income tax system, which is to tax the profit of all companies resident or operating through a permanent establishment in Belgium, whether standalone or integrated. While the determination of taxable profit in the case of non-integrated/domestic standalone companies that transact on the market is rather straightforward, as it is based on the difference between income and costs determined in a competitive market, the determination of taxable profit in the case of integrated multinational group companies, requires the use of proxies. That is, integrated multinational group companies will have to set the prices they apply to those intra-group transactions for determining their taxable profit instead of those prices being dictated by the market. Even if certain strategic decisions could be expected to be taken in the best interest of a group as a whole, Belgian corporate income tax is levied on individual entities, not on groups. The contested scheme relates only to the taxable profit of Belgium group companies, so that any reduced tax revenue is based individually on those companies' results. While it may be true that Belgium tax law contains certain special provisions applicable to groups, these generally aim at putting on equal footing non-integrated companies and economic entities structured in the form of groups, but not at treating groups more favourably.
Finally, if the Commission were to accept Belgium's argument on this point, that would allow a Member State to easily evade the application of the Union State aid rules merely by introducing the exemption into its tax code.
In conclusion, the reference system against which the Excess Profit exemption must be assessed to determine whether it is selective is the Belgian corporate income tax system, which has as its objective the taxation of profits of all companies resident or operating through a permanent establishment in Belgium in the same manner. Indeed, since the aim of the contested scheme is to adjust the company's taxable profit for the purpose of levying Belgian corporate income tax on that profit under the Belgian corporate income tax system, it is that system that constitutes the reference system against which the scheme should be examined to determine whether its beneficiaries have benefitted from a selective advantage.
Having determined that the Belgian corporate income tax system constitutes the reference system against which the contested scheme should be assessed, it is necessary to establish whether the Excess Profit exemption constitutes a derogation from that reference system, leading to unequal treatment between companies that are legally and factually in a similar situation in light of the objective pursued by that system.
In relation to that second step of the selectivity analysis, whether a tax measure constitutes a derogation from the reference system will generally coincide with the identification of the advantage granted to its beneficiaries under that measure. Indeed, where a tax measure results in an unjustified reduction of the tax liability of beneficiaries who would otherwise be subject to a higher level of tax under the reference system, that reduction constitutes both the derogation from the system of reference and the advantage granted by the tax measure.
The Commission considers the Excess Profit exemption granted pursuant to Article 185(2)(b) WIB 92 to constitute a derogation from the Belgian corporate income tax system and not the mere application of it. As will be demonstrated in the following two subsections, the Commission considers that derogation to confer a selective advantage on the beneficiaries of the contested scheme.
Accordingly, the Commission confirms its view, expressed at recital 89 of the Opening Decision, that the contested scheme is selective on several levels and for several reasons.
First, the Excess Profit exemption is only available to entities that are part of a multinational group, not to standalone entities or entities forming part of domestic corporate groups. Indeed, since the contested scheme is based on Article 185(2)(b) WIB 92, which restricts the application of the exemption and the grant of an advance ruling necessary to benefit from the exemption to entities engaged in cross-border transactions, only Belgian entities forming part of a multinational group may benefit from the Excess Profit exemption. In other words, the economic advantage provided to beneficiaries under the contested scheme is de jure selective because it is exclusively available to entities forming part of a multinational group, and not available to standalone entities or entities forming part of a domestic corporate group. In particular, entities forming part of a domestic corporate group could also operate as a central entrepreneur following a national reorganisation and could therefore also claim that their profit actually recorded after that reorganisation exceeds a hypothetical average profit that a standalone company carrying out comparable activities could be expected to achieve due to the (alleged) creation of national synergies or economies of scale. However, unlike the Belgium-based central entrepreneurs of their international competitors that deal with foreign associated group companies, those entities cannot obtain the tax base discount for excess profit under the contested scheme because those entities are not within the scope of Article 185(2)(b) WIB 92.
Third, the Excess Profit exemption scheme exempts profit which — allegedly — results from synergies, economies of scale or from other benefits related to being part of a multinational group. While all corporate groups can lay claim to such benefits, only entities belonging to a multinational group of a size that is sufficiently large to generate significant profit from synergies, economies of scale or other intragroup benefits have an incentive to obtain a ruling under the contested scheme. That is because the process for obtaining a ruling requires a detailed request presenting the new situation justifying the exemption, detailing the presence of the entity in terms of employment and providing a full excess profit study, which is clearly more cumbersome for small corporate groups than for large corporate groups. The synergies and cost savings invoked in the ruling requests effectively require a certain scope and size of operations that is sufficiently large to justify the request for a ruling. Indeed, in response to a request by the Commission, Belgium was unable to provide a single example where the Excess Profit exemption was requested by and granted to a Belgian group entity that is part of a small multinational group. In other words, the contested scheme is also de facto selective since only Belgian entities forming part of a large or at best medium-sized multinational group can effectively benefit from the Excess Profit exemption, not entities that are part of a small multinational group.
In conclusion, since the contested scheme allows only Belgian entities forming part of a sufficiently large multinational group establishing new operations in Belgium to reduce their tax base by deducting from their profit actually recorded so-called ‘excess profit’, that scheme should be considered to grant a selective advantage to those entities for the purposes of Article 107(1) of the Treaty. Indeed, by reducing the amount of tax normally due under the under the ordinary system of taxation of corporate profits, the Excess Profit exemption relieves those Belgian entities from a cost they should normally bear from their budget and thus confers a selective advantage upon them.
The Commission also does not agree, as claimed by Belgium, that that selective advantage results from the absence of taxation abroad of the profit exempted in Belgium, as it is Belgium that unilaterally reduces the tax base of the Belgian group entity benefitting from the contested scheme irrespective of any actual or claimed taxation of the same profit by another Member State. In any event, Article 107(1) of the Treaty prohibits the grant of State aid by a Member State. Therefore, the assessment of whether a particular scheme gives rise to an advantage should be made having regard to the actions of the Member State in question, namely Belgium. That assessment need not take into account a possible neutral or negative impact of the scheme at the level of other group companies as a result of their treatment by other Member States.
The Court has thus accepted that a tax measure which results in a group company charging transfer prices that do not reflect those which would be charged in conditions of free competition — that is, prices negotiated by independent undertakings negotiating under comparable circumstances at arm's length — confers a selective advantage on that group company, in so far as it results in a reduction of its taxable base and thus its tax liability under the ordinary corporate income tax system. This principle, that transactions between intra-group companies should be remunerated as if they were agreed to by independent companies negotiating under comparable circumstances at arm's length, is generally referred to as the ‘arm's length principle’.
The purpose of the arm's length principle is to ensure that transactions between group companies are treated for tax purposes by reference to the amount of profit that would have arisen if the same transactions had been executed by independent companies. Otherwise, group companies would benefit from a favourable treatment under the ordinary corporate income tax system when it comes to the determination of their taxable profit that is not available to standalone companies, leading to unequal treatment between companies that are factually and legally in a similar situation in light of the objective of that system, which is to tax the profit of all companies falling under its tax jurisdiction.
The Commission's assessment of whether Belgium granted a selective advantage under the contested scheme must consist in verifying whether the methodology accepted by Belgium for determining the adjusted arm's length profit under the second step of that scheme departs from a methodology that leads to a reliable approximation of a market-based outcome and thus from the arm's length principle. In so far as that methodology results in a lowering of the Belgian entity's tax liability under the general Belgian corporate income tax system as compared to undertakings in a comparable legal and factual situation, that scheme will be deemed to confer a selective advantage for the purposes of Article 107(1) of the Treaty.
The Commission does not consider the second step to be in line with the arm's length principle. As explained at recital 154, the whole of the residual profit resulting from intra-group transactions should, as a rule, be considered the central entrepreneur's arm's length profit, in line with the entrepreneurial risks and connected costs borne by it (i.e. costs, if any, of managing or mitigating the risk, costs that may arise from the realisation of the risk), as central entrepreneur in the group structure. Consequently, the part of the profit that is considered by Belgium to be ‘excess profit’ is in fact just a component of the residual profit that is attributable to the Belgian group entity as central entrepreneur within its multinational group. Exempting any of that profit from the central entrepreneur's tax base therefore constitutes an unjustified derogation from a market-based outcome, which is contrary to the arm's length principle, and leads to the grant of a selective advantage in favour of entities benefitting from the contested scheme since it results in a lowering of their tax liability under the Belgian corporate income tax system.
Belgium argues that the Belgian group entities record a part of the residual profit not because of their individual functions, risks and assets, but because they belong to a multinational group. Belgium refers to that part of the profit as profit from synergies or economies of scale and claims that such profit should not be attributed to the Belgian central entrepreneur under the arm's length principle. The Commission does not agree with that line of reasoning.
Second, the manner in which the adjusted arm's length profit is arrived at under the second step of the process described at recital 15 is inherently inconsistent with whatever transfer pricing methodology is applied to arrive at the initial arm's length profit under the first step of that process. Indeed, since only entities operating as the central entrepreneur can benefit from the Excess Profit exemption, any transfer pricing methodology applied under the first step must consider them as the most complex and high risk party in a series of controlled transactions. Under the second step, that same entity is, however, invariably treated as the tested party and the less-complex part of the transaction in the application of the TNMM.
In other words, assuming the arm's length principle has been properly applied following the first step, the conditions and prices under which the Belgian group entities transact with associated group entities should be reflected in its profit actually recorded. The proper application of that principle leads to routine profit being attributable to and actually recorded by the associated entities abroad and residual profit being attributable to and actually recorded by the Belgian group entities.
Nor is the unilateral and abstract tax adjustment as provided by the contested scheme supported by the OECD Model Tax Convention, which forms the basis for many Double Tax Treaties between OECD and non-OECD members. Indeed, the unilateral adjustment by Belgium to the group entity's profit actually recorded inevitably means that the excess profit exempted under that scheme cannot and will not be taxed by another jurisdiction for the simple reason that those other jurisdictions do not recognise the right to tax any profit emerging specifically from synergies or economies of scale because those profits pertain only to Belgium, the tax jurisdiction in which they are actually recorded.
Third, to benefit from the Excess Profit exemption under the contested scheme, the existence of synergies or economies of scale does not need to be proven or quantified under the second step. Instead, the existence of synergies or economies of scale is assumed in abstracto and measured as the difference between the arm's length profit obtained by the Belgian entity following the first step of the process described at recital 15 (as reflected in its profit actually recorded) and an adjusted arm's length profit arrived at following the second step.
While the terms of Article 185(2)(b) WIB 92 indicate that that provision applies to situations involving two (identified or identifiable) companies and that the tax administration may apply a (corresponding) downward adjustment on the taxable profit of a Belgian company if the same profit is also included in the taxable profit of a foreign associated company, the replies given by the Minister of Finance to the parliamentary questions on the application of that provision clearly affirm the extended application of the Excess Profit exemption beyond the terms of that provision to profit that has not been recorded by or included in the tax base of an associated foreign group entity in another tax jurisdiction. While the limitation of a corresponding downward adjustment to companies that are part of a multinational group in line with the exact terms of Article 185(2)(b) WIB 92 may be justified by the nature or general scheme of the system, this is not the case for the Excess Profit exemption.
In addition, the Commission does not consider the arm's length principle, and in particular Article 9 of the OECD Model Tax Convention which translates that principle in relation to double taxation, to justify the unilateral downward adjustment to a taxpayer's tax base granted by the Excess Profit exemption scheme.
The Commission recalls that the application of the arm's length principle by tax administrations is primarily meant to prevent companies that are part of an international group from being able to influence transfer prices and thus profit allocation between them, a possibility that standalone companies do not have. The normal application of the arm's length principle therefore provides tax administrations with the right to increase the tax base of companies engaging in intra-group transactions to ensure equal treatment with taxpayers that only transact under market conditions.
While the arm's length principle allows tax administrations to make unilateral upward adjustments to the tax base of group companies that do not respect that principle in their transfer pricing, a downward transfer pricing adjustment leading to a tax reduction is only foreseen (not required) under the arm's length principle in the exceptional situation where it is a corresponding adjustment following a primary adjustment in another tax jurisdiction, i.e. on a symmetrical basis. As explained in section 6.3.2.2, a unilateral precautionary downward adjustment of the profit actually recorded does not follow from the proper application of the arm's length principle in general, nor does it in the specific case of the Excess Profit exemption.
Indeed, Article 9 of the OECD Model Tax Treaty only applies if it is established that the same profit has been included in the tax base of two different companies established in different tax jurisdictions, and has been — or is at risk of being — ‘taxed accordingly’ by both jurisdictions.
In conclusion, the Commission concludes that the Excess Profit exemption cannot be said to derive directly from the intrinsic basic or guiding principles of the reference system or to be the result of inherent mechanisms necessary for the functioning and effectiveness of that system. The Commission also concludes that the contested scheme goes beyond what is necessary and proportionate to achieve the objective of preventing double taxation and therefore cannot be justified by the nature or general scheme of that system.
For all the foregoing reasons, the Commission concludes that the contested scheme confers a selective advantage on Belgian entities forming part of a multinational group by applying an unilateral downward adjustment to their tax base, since that adjustment leads to a lowering of their tax liability in Belgium as compared to the taxes those undertakings would otherwise have been obliged to pay according to the ordinary system of taxation of corporate profits under the general Belgian corporate income tax system.
The beneficiaries of the contested scheme are Belgian entities forming part of a multinational group that have requested and obtained a tax ruling on the basis of Article 185(2)(b) WIB 92 and for which a unilateral downward adjustment has effectively been applied to the profit actually recorded in their accounts for the determination of their taxable profit under the general Belgian corporate income tax system. The Commission notes that those entities form part of a multinational group and that the exemption of excess profit generated as a result of being part of a multinational group constitutes the stated rationale for the contested scheme.
Moreover, it is the multinational group as a whole which will have taken the decision to relocate part of their activities to Belgium or to make significant investments in Belgium, which is a requirement to benefit from the contested scheme. In other words, where transfer pricing is required to set prices for products and services within various legal entities of one and the same group, the effects of setting a transfer price affects by its very nature more than one group company (a price increase in one company affects the profit of the other).
In light of the foregoing, the Commission concludes that the Excess Profit exemption scheme, based on Article 185(2)(b) WIB 92 and introduced by Law of 21 June 2004, grants a selective advantage to the beneficiaries of the scheme as well as to the multinational groups to which they belong, that is imputable to Belgium and financed through State resources, and distorts or threatens to distort competition and is liable to affect intra-Union trade. The contested scheme therefore constitutes State aid within the meaning of Article 107(1) of the Treaty.
Since the contested scheme gives rise to a reduction of charges that should normally be borne by the beneficiaries in the course of their annual business operations, the contested scheme should be considered as granting operating aid to the beneficiaries and the multinational groups to which they belong.
Belgium has not invoked any of the grounds for a finding of compatibility of the state aid scheme
Moreover, as explained in recital 188, the contested scheme should be considered as granting operating aid. As a general rule, such aid can normally not be considered compatible with the internal market under Article 107(3) of the Treaty in that it does not facilitate the development of certain activities or of certain economic areas, nor are the tax incentives in question limited in time, digressive or proportionate to what is necessary to remedy to a specific economic handicap of the areas concerned.
Consequently, the Excess Profit exemption scheme is incompatible with the internal market.
According to Article 108(3) of the Treaty, Member States are obliged to inform the Commission of any plan to grant aid (notification obligation) and they may not put into effect any proposed aid measures until the Commission has taken a final position decision on the aid in question (standstill obligation).
The Commission notes that Belgium did not notify the Commission of any plan to grant aid through the contested scheme, nor did it respect the standstill obligation laid down in Article 108(3) of the Treaty. Therefore, in accordance with Article 1(f) of Regulation (EU) 2015/1589, the Excess Profit exemption scheme constitutes an unlawful aid scheme, put into effect in contravention of Article 108(3) of the Treaty.
Article 16(1) of Regulation (EU) 2015/1589 also provides that the Commission shall not require recovery of the aid if this would be contrary to a general principle of law.
Belgium argues, first, that recovery should be prevented by the principles of legitimate expectations and legal certainty, since previous Commission decisions on transfer pricing and State aid have led it to believe that there can be no State aid involved in a particular fiscal measure if the Member State adheres to the arm's length principle. It further argues that recovery should be prevented because the aid amount is difficult to quantify and because recovery might lead to double taxation.
As regards the alleged difficulty to quantify the aid amount under the scheme, the Commission sees no difficulty in quantifying that amount. Since the Excess Profit exemption corresponds to a percentage of pre-tax profit applied to the Belgian group entity's profit actually recorded, all that is needed to eliminate the selective advantage granted by the measure is the repayment of the difference between the tax due on the profit actually recorded and the tax effectively paid as a result of the contested scheme plus the cumulated interest on that amount as from the moment that the aid was granted.
Finally, as regards Belgium's argument that recovery might lead to double taxation, the Commission refers to Section 6.3.3 and recalls that double taxation can only occur in situations where the same profit is included in the tax base of the Belgian group entity as well as in the tax base of an associated foreign entity. The Excess Profit exemption, however, concerns a unilateral adjustment that is not granted in response to the prior taxation of the same profit in another tax jurisdiction. In any event, even if double taxation were a legitimate concern, it could be solved through the normal resolution mechanisms put in place pursuant to Double Tax Treaties, the EU Arbitration Convention or the proper application of Article 185(2)(b) WIB 92 itself. Indeed, as explained in recital 172, downward adjustments applied by the Belgian tax administration in response to the taxation of the same profit in another tax jurisdiction (following their declaration by the taxpayer or a primary upward adjustment applied by the foreign jurisdiction) would then be justified by the nature and general scheme of the tax system and would not constitute State aid.
In conclusion, none of Belgium's arguments for preventing or limiting recovery of aid granted through the application of the contested scheme can be accepted.
In accordance with the Treaty and the established case-law of the Court of Justice, the Commission is competent to decide that the Member State concerned must abolish or alter aid when it has found that it is incompatible with the internal market. The Court has also consistently held that the obligation on a State to abolish aid regarded by the Commission as being incompatible with the internal market is designed to re-establish the previously existing situation. In this context, the Court has stated that that objective is attained once the recipient has repaid the amounts granted by way of unlawful aid, thus forfeiting the advantage which it had enjoyed over its competitors on the market, and the situation prior to the payment of the aid is restored.
the amount of tax saved as a consequence of all rulings delivered to that beneficiary, as well as
the cumulated interest on that amount calculated as from the moment the aid is granted.
The aid is deemed granted on the day the tax saved would have been due in each tax year in the absence of the ruling.
the profit effectively deducted from a positive tax base,
multiplied by the corporate tax rate applicable in the tax year concerned.
In principle, the Excess Profit deduction claimed by the taxpayer in its annual tax return should be taken into account, possibly after correction by the Belgian tax administration in the context of a tax audit, for the purposes of determining the amount of tax saved.
If the deduction to which the beneficiary was entitled in a specific year could not (fully) take place in that year because of an insufficient positive tax base, and if the amount not effectively deducted was carried forward to a subsequent tax year, then the aid shall be deemed attributed in the subsequent year(s) when the amounts of excess profit could effectively be deducted from a positive tax base.
Bearing in mind that recovery should ensure that the tax ultimately due by the beneficiary of the scheme is the tax that would have been due in the absence of the Excess Profit exemption scheme, the methodology described above can be further refined in cooperation with the Belgian authorities during the recovery stage to establish the actual amount of the tax advantage enjoyed by the beneficiaries in the light of their individual situation. The tax that would have been due in the absence of the Excess Profit exemption scheme must be calculated on the basis of the general scheme applicable in Belgium at the time of the granting of the aid and in respect of the actual factual and legal situation of the beneficiary, not in respect of hypothetical alternative situations based on different operational and legal circumstances that the beneficiary could have chosen in the absence of the Excess Profit exemption.
In conclusion, the Commission finds that Belgium has unlawfully implemented the Excess Profit exemption scheme in breach of Article 108(3) of the Treaty. By virtue of Article 16 of Regulation (EU) 2015/1589 Belgium is required to recover all aid granted to the beneficiaries of the scheme,
HAS ADOPTED THIS DECISION:
Article 1
The Excess Profit exemption scheme, based on Article 185(2)(b) of the Belgian Income Tax Code 1992, pursuant to which Belgium granted tax rulings to Belgian entities of multinational corporate groups authorising those entities to exempt part of their profit from corporate income taxation constitutes aid within the meaning of Article 107(1) of the Treaty that is incompatible with the internal market and that was unlawfully put into effect by Belgium in breach of Article 108(3) of the Treaty.
Article 2
(1)
Belgium shall recover all incompatible and unlawful aid referred to in Article 1 from the recipients of that aid.
(2)
Any sums that remain unrecoverable from the recipients of the aid, following the recovery described in the paragraph 1, shall be recovered from the corporate group to which the recipient belongs.
(3)
The sums to be recovered shall bear interest from the date on which they were put at the disposal of the beneficiaries until their actual recovery.
(4)
The interest on the sums to be recovered shall be calculated on a compound basis in accordance with Chapter V of Regulation (EC) No 794/2004.
(5)
Belgium shall stop granting the aid referred to in Article 1 and shall cancel all outstanding payments of such aid with effect from the date of adoption of this decision.
(6)
Belgium shall also reject all requests for an advance ruling concerning the aid referred to in Article 1 submitted to the Ruling Commission and pending on the date of the adoption of this decision.
Article 3
(1)
Recovery of the aid referred to in Article 1 shall be immediate and effective.
(2)
Belgium shall ensure that this Decision is fully implemented within four months following the date of notification of this Decision.
Article 4
(1)
Within two months following notification of this Decision, Belgium shall submit the following information:
(a)
the list of beneficiaries that have received the aid referred to in Article 1 and the total amount of aid received by each of them;
(b)
the total amount (principal and recovery interests) to be recovered from each beneficiary;
(c)
a detailed description of the measures already taken and planned to comply with this Decision;
(d)
documents demonstrating that the beneficiaries have been ordered to repay the aid.
(2)
Belgium shall keep the Commission informed of the progress of the national measures taken to implement this Decision until recovery of the aid referred to in Article 1 has been completed. It shall immediately submit, on simple request by the Commission, information on the measures already taken and planned to comply with this Decision. It shall also provide detailed information concerning the amounts of aid and recovery interest already recovered from the beneficiaries.
Article 5
This Decision is addressed to the Kingdom of Belgium.
Done at Brussels, 11 January 2016.
For the Commission
Margrethe Vestager
Member of the Commission
ANNEXLIST OF RULINGS GRANTED UNDER THE CONTESTED SCHEME
No decision | Date | Company | start Ruling | end Ruling | EBIT exemption (%) | NPBT exemption (%) | Total excess profit in tax return2005-2014 |
|---|---|---|---|---|---|---|---|
500.117 | 26.5.05 | BASF Antwerpen | periode van 3 jaar | […] | |||
500.249 | 15.12.05 | Eval Europe NV | 1.4.2004 | 2009 | […] | ||
500.343 | 4.5.06 | BASF Antwerpen | periode van 4 jaar | […] | |||
600.144 | 17.10.06 | Celio International NV | 1.2.2007 | 2012 | […] | ||
600.279 | 21.11.06 | […]135 | 1.1.2007 | 2012 | [40-60] | ||
600.460 | 30.1.07 | BP Aromatics Limited NV | 1.1.2007 | [40-60] | […] | ||
600.469 | 6.2.07 | BASF Antwerpen | periode van 5 jaar en 3 jaar | […] | |||
700.064 | 8.5.07 | […]135 | 8.5.2007 | 2012 | |||
700.075 | 10.7.07 | The Heating Company | 10.7.2007 | 2012 | [60-80] | […] | |
700.357 | 25.11.08 | LMS International | 1.1.2008 | 2013 | [60-80] | […] | |
700.412 | 27.11.07 | […]135 | 1.1.2007 | 2012 | |||
800.044 | 12.8.08 | […]135 | 1.1.2008 | 2013 | [60-80] | ||
800.122 | 1.7.08 | Tekelec International sprl | 1.6.2008 | 2013 | [60-80] | […] | |
800.225 | 15.7.08 | VF Europe bvba | 1.1.2010 | 2015 | [60-80] | […] | |
800.231 | 13.1.09 | Noble International Europe bvba | 1.9.2007 | 2012 | [60-80] | […] | |
800.346 | 9.6.09 | […]135 | 1.5.2010 | 2015 | |||
800.407 | 8.9.09 | […]135 | 1.1.2011 | 2015 | |||
800.441 | 11.3.09 | Eval Europe NV | 11.3.2009 | 2013 | […] | ||
800.445 | 13.1.09 | Bridgestone Europe NV | 1.1.2006 | 2011 | > OM [1-4] | […] | |
900.161 | 26.5.09 | St Jude Medical CC bvba | 1.1.2009 | 2014 | > OM [1-4] | […] | |
900.417 | 22.12.09 | Trane bvba | 1.1.2010 | 2015 | [40-60] | […] | |
900.479 | 29.6.10 | […]135 | 1.1.2010 | 2015 | |||
2010.054 | 20.4.10 | […]135 | 1.3.2010 | 2015 | > OM [1-4] | ||
2010.106 | 20.4.10 | Luciad NV | 1.1.2009 | 2014 | [40-60](2009-2011) [40-60] (2012-2013) | […] | |
2010.112 | 13.7.10 | […]135 | 1.1.2011 | 2016 | [60-80] | ||
2010.239 | 6.9.11 | Ontex bvba | 1.1.2011 | 2016 | [60-80] | […] | |
2010.277 | 7.9.10 | […]135 | [60-80] | ||||
2010.284 | 13.7.10 | […]135 | 1.1.2010 | 2015 | [60-80] | ||
2010.488 | 15.2.11 | Dow Corning Europe SA | 1.1.2010 | 2015 | > OM [1-4] | […] | |
2011.028 | 22.2.11 | Soudal NV | 1.1.2010 | 2015 | [40-60] | […] | |
2011.201 | 13.9.11 | Belgacom Int. Carrier Services | 1.1.2010 | 2015 | [20-40] | […] | |
2011.326 | 6.9.11 | Atlas Copco Airpower NV | 1.1.2010 | 2015 | [40-60] | […] | |
2011.337 | 8.11.11 | Evonik Oxena Antwerpen NV | 1.1.2012 | 2017 | [20-40] | […] | |
2011.469 | 13.12.11 | BP Aromatics Limited NV | 1.1.2012 | […] | |||
2011.488 | 24.1.12 | […]135 | 1.1.2015 | 2020 | [60-80] | ||
2011.542 | 28.2.12 | Chep Equipment Pooling NV | 1.7.2010 | 2015 | [20-40] | […] | |
2011.569 | 26.2.13 | Nomacorc | 1.1.2012 | 2016 | [60-80] | […] | |
2011.572 | 18.12.12 | […]135 | |||||
2012.031 | 25.9.12 | Pfizer Animal Health SA | 1.12.2012 | 2017 | [80-100] | […] | |
2012.038 | 6.3.12 | Kinepolis Group NV | 1.1.2012 | 2016 | [60-80] | […] | |
2012.062 | 24.5.12 | Celio International NV | 1.2.2012 | 2017 | […] | ||
2012.066 | 3.4.12 | […]135 | 1.1.2013 | 2018 | [60-80] | ||
2012.101 | 17.4.12 | […]135 | 1.1.2014 | 2019 | [60-80] | ||
2012.180 | 18.9.12 | FLIR Systems Trading Belgium bvba | 1.8.2012 | [60-80] | […] | ||
2012.182 | 18.9.12 | […]135 | 31.7.2013 | 2015 | [40-60] | ||
2012.229 | 28.8.12 | ABI | 1.1.2011 | 2016 | [80-100] | […] | |
2012.229 | 29.8.12 | AMPAR | [80-100] | […] | |||
2012.355 | 6.11.12 | Knauf Insulation SPRL | 1.1.2013 | 2017 | [60-80] | […] | |
2012.375 | 20.11.12 | Capsugel Belgium NV | 1.1.2012 | 2017 | [60-80] | […] | |
2012.379 | 20.11.12 | Wabco Europe BVBA | 1.1.2012 | 2017 | [40-60] | […] | |
2012.446 | 18.12.12 | […]135 | 1.1.2015 | 2020 | [60-80] | ||
2012.468 | 26.2.13 | BASF Antwerpen | periode van 6 jaar | […] | |||
2013.052 | 16.4.13 | […]135 | periode van 3 jaar | ||||
2013.111 | 30.4.13 | Delta Light NV | 31.8.2012 | 2016 | [60-80] | […] | |
2013.138 | 17.9.13 | […]135 | 1.1.2012 | 2017 | [60-80] | ||
2013.156 | 25.6.13 | Punch Powertrain NV | 1.1.2013 | 2017 | [60-80] | […] | |
2013.331 | 8.10.13 | Puratos NV | 1.1.2013 | 2018 | [40-60] | […] | |
2013.443 | 10.12.13 | Omega Pharma International | 1.1.2013 | 2018 | [40-60] | […] | |
2013.540 | 10.12.13 | […]135 | 1.1.2014 | 2019 | [60-80] | ||
2013.579 | 28.1.14 | Esko Graphics BVBA | 1.1.2012 | 2017 | [60-80] | […] | |
2013.612 | 25.2.14 | Magnetrol International NV | 1.1.2012 | 2016 | [60-80] | […] | |
2014.091 | 1.4.14 | Mayckawa Europe NV | 31.12.2013 | 2018 | [60-80] | […] | |
2014.098 | 10.6.14 | […]135 | 1.1.2014 | 2019 | [60-80] | ||
2014.173 | 13.5.14 | […]135 | 1.1.2012 | 2016 | [60-80] | ||
2014.185 | 24.6.14 | […]135 | [60-80] | ||||
2014.288 | 5.8.14 | […]135 | 1.7.2014 | 2019 | [60-80] | ||
2014.609 | 23.12.14 | […]135 | 1.1.2014 | 2019 | [60-80] | ||
TOTAL excess profit | [< 2 100 000 000136] | ||||||
Source: Submission by the Belgian authorities of 29 May 2015, following the Opening Decision. | |||||||