EU Competition Commissioner Margrethe Vestager scored a preliminary win in her case against Belgian tax ruling practices at the EU’s highest court.
The European Court of Justice ruled that the European Commission was right to regard Belgium’s practice of giving tax breaks to multinational companies as a system or “scheme.”
Vestager in 2016 ordered Belgium to claw back about €700 million from 39 companies, including Atlas Copco, BP and AB InBev, which were granted tax rulings that allowed them to reduce their corporate tax base by between 50 percent and 90 percent.
The ECJ judges overruled the lower EU General Court, which in 2019 annulled the Commission’s decision, following Belgium’s argument that Brussels could not take a one-size-fits-all approach.
“The General Court made several errors of law,” the court said in a statement. “The sample of rulings examined by the Commission … is, by its nature, capable of representing a ‘systematic approach’ taken by the Belgian tax authorities.”
The case is now sent back to the General Court, which still has to rule on the other — more substantive — elements: whether Belgium gave the companies a “selective advantage” amounting to illegal state aid.
The court therefore did not rule on broader questions that could affect other cases in which the Commission used its state aid powers to go after harmful tax ruling practices, such as Apple’s €13 billion tax bill in Ireland.
Following the General Court’s first ruling, the Commission had in parallel opened individual in-depth probes into the 39 tax rulings. These can now be shelved.
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