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The EC state aid ruling on the Belgian ‘excess profit’ tax scheme

Following the European Commission’s announcement that the Belgian excess profit tax scheme is not compatible with state aid rules, James R Modrall (Norton Rose Fulbright) considers the practical implications of the decision. 

What is the Belgian excess profit scheme?
 
The Belgian excess profit system allowed multinationals to apply for rulings from the Belgian authorities under which they would not be taxed on Belgian excess profits that are deemed to arise because they are members of multinational groups.
 
Why did the European Commission rule that this was illegal state aid? 
 
Measures taken to exempt a company from an obligation to pay taxes can amount to unlawful state aid if the following conditions are met:
  • the tax measure must grant an economic advantage;
  • the advantage must be financed through...

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