The European Union has ordered Belgium to recover some €698m in illegal tax breaks from 35 multinationals.
The move is the EU’s latest ruling against the sweet deals many member states offered to some of the world’s biggest companies.
EU competition commissioner Margrethe Vestager said the tax advantage given to a select group of mainly European companies “distorts competition” by putting smaller competitors “on an unequal footing”.
“National tax authorities cannot give any company, however large, however powerful, an unfair competitive advantage compared to others,” Ms Vestager said. “This scheme puts smaller competitors at an unfair disadvantage.”
Belgian finance minister Johan Van Overtveldt said he could still appeal the decision before the EU’s high court depending on negotiations on how to claw back the taxes. “The consequences for the companies involved could be major, and the recovery extremely complex,” he said.
Since the EU ruled on a government taxation system instead of deals with specific companies, it did not name any multinational involved beyond noting that they were mainly European.
Under the system, Ms Vestager said multinationals did not have to pay taxes on more than 50% of their actual profits. Sometimes it went as high as 90%.
“We know of no other scheme similar to this, probably that was one reason it was named ’only in Belgium’,” Ms Vestager said.
The disclosure that multinationals have benefited from huge tax breaks across Europe has become a big political issue at a time when many governments have been raising taxes on their citizens in an attempt to balance the books.
Over the past months, Ms Vestager’s office has gone after several member states, including the Netherlands and Luxembourg and targeted companies like Fiat and Starbucks. It has three more tax probes ongoing, centring on US companies like Apple, Amazon and McDonald’s.
Ms Vesteger has faced criticism that she has unduly focused on US companies. She denied that the latest ruling was part of a balancing act.
“I, of course, hear the criticism that this is about US companies, which it is obviously not,” she said.