The European Commission has published a report first compiled in June which concluded that Luxembourg granted French energy company Engie unfair tax benefits to the tune of around €120 million.
The Commission found that tax rulings granted by the government of Luxembourg allowed two Engie group companies to avoid paying taxes on almost all their profits, actions that are illegal under EU aid regulations.
The ruling came after the European Commission concluded a state-aid probe into the tax affairs of Engie, France’s former natural-gas monopoly, earlier this year. The finding ruled that Luxembourg had intentionally deviated from the EU’s provisions on national tax laws to help lower the tax bill for Engie, which was then known as GDF Suez.
The EU has moved to crack down on any Member State that gives a select number companies a tax advantage over their competition. In the case of Engie, the tax breaks were first implemented in 2008 and 2010, and allowed the company to pay an effective corporate tax rate of 0.3% on certain profits in Luxembourg for a period of 10 years.
The tax rulings “endorsed two complex financing structures put in place by Engie that treat the same transaction in an inconsistent way, both as debt and as equity,” EU Competition Commissioner Margrethe Vestager said in a statement in June. “This artificially reduced the company’s tax burden.”