Wednesday, February 4, 2015

Tax optimization: Brussels puts Belgium indicted – Les Echos

Tax optimization: Brussels puts Belgium indicted – Les Echos

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Who’s next? The European Commission has to raise a little more pressure on tax optimization issues, opening a fifth survey on tax optimization practices too favorable to multinational corporations, to be contrary to the rules of competition. Luxembourg (vis-à-vis Amazon and Fiat), the Netherlands (with Starbucks) and Ireland (and the Apple case) had already been singled out by the EU executive last June. Now it is the turn of Belgium to be indicted.

The kingdom however had a special treatment: in the previous cases, specific agreements were covered (the famous “tax ruling” or tax rescripts concluded between a multinational and state), while there, for the first time, it is a complete system that is scanned by Brussels. “Changing the rules of the tax game in Europe is difficult given the unanimity required to make a decision. With the proliferation of these antitrust investigations, Brussels is currently around the problem “, says a veteran community Arcana.

In Belgium, the -called “excess profits” which is in the viewfinder of the Commission. Under a law passed in 2004, a Belgian subsidiary of a multinational corporation may deduct from its taxable profits it is supposed to draw from its membership in an international structure (economies of scale, research costs, etc. ). An advantage that can not benefit the Belgo-Belgian companies. “If confirmed, this would be a distortion of competition ‘ says Margrethe Vestager, the Commissioner of Competition. It declined to say how many companies are involved. “Dozens” , according to a European source, while the Belgian daily “Le Soir” evaluated the phenomenon sixty cases, which could reduce their taxable income of 50 to 90%. What make rather theoretical tax rate on corporations from 34% intended to apply in Belgium.

This new survey comes as the European Parliament will vote tomorrow on the creation of a commission of inquiry on the “LuxLeaks” demanded by the Greens. The main parties are much less enthusiastic, and could benefit from the legal reserve service to transform this commission of inquiry into “special committee” which would have a more restricted access to records of tax administrations. “There will still public hearings. This commission is primarily an instrument of political pressure to denounce the practices spread throughout Europe “ says Philippe Lamberts (Greens).

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