In the wake of its momentous decision to order Apple to repay €13 billion in back taxes to the Irish exchequer, the EU is after another giant for allegedly receiving tax aids from one of the member states.
Last Monday the European Commission has opened an in-depth investigation into Luxembourg’s tax rulings concerning an alleged unfair advantage that the country might have given to the GDF Suez group (now Engie), in breach of EU state aid rules.
As from September 2008, Luxembourg issued several tax rulings concerning the tax treatment of specific financial transactions made between four companies of the GDF Suez group, all based in Luxembourg.
GDF Suez could have been able to avoid paying taxes on such transactions as a result of these tax rulings, according to the Commission’s preliminary assessment.
If confirmed, GDF Suez could have obtained a considerable economic advantage in comparison to other companies under the same fiscal conditions: in fact, a significant proportion of the profits recorded by the company might haven’t been taxed at all.
In one sentence, this would mean illegal state aid.
“We will look carefully at tax rulings issued by Luxembourg to GDF Suez. They seem to contradict national taxation rules and allow GDF Suez to pay less tax than other companies” said Margrethe Vestager, Commissioner in charge of competition policy.
Regarding the amount, the European Commissions’ spokesperson Ricardo Cardoso said in a news briefing on Monday that it is too early to say how much tax Engie may have to pay if it is found to have breached state aid rules.
GDF Suez (Engie since 2015) is an electric utility company partly owned by France. The company has not commented the Commissions’ probe yet.
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The investigation into one of the strategically and economically most important French companies arrives ahead of Vestagers’ visit to the United States.
The commissioner is set to meet the US Treasury Secretary Jack Lew this week amid fierce criticism over her recent decision to deliver Apple a € 13 billion fine over tax breaks in Ireland.
Late last week, 185 different CEO from Silicon Valley asked German chancellor Angela Merkel and French President to intervene in the Apple tax ruling.
The EU is already investigating into tax deals granted by Luxembourg to other US multinationals such as McDonald’s and Amazon.
As a result, Vestager has been criticised for allegedly targeting American companies, something that the EU rejects firmly.
“We take decisions as soon as we are ready to take them” stated European Commission spokesman Ricardo Cardoso, adding that the timing for this investigation is merely “coincidental”.
The commissions’ investigations have in fact targeted also other European multinationals in the past: last December Italian car maker Fiat was ordered to pay back up to €30m to Luxembourg.
The tiny country has been at the center of attention regarding tax aid investigation since the LuxLeaks revelations in 2014.
The current president of the European Commission Jean-Claude Juncker was the Prime minister of the Grand Duchy at the time of the allegedly illegal tax rulings regarding the Engie case.