EU in new tax deals probe

European Union antitrust regulators have opened a probe into tax deals granted by Luxembourg to French electric utility company Engie, which they consider to have given the company an unfair advantage over others.

The European Commission said it had concerns that the tax rulings granted by Luxembourg since 2008 appeared to treat the same financial transaction as both debt and equity, leading to double non-taxation of companies in the GDF Suez group, as Engie was formerly known.

“Financial transactions can be taxed differently depending on the type of transaction, equity or debt - but a single company cannot have the best of two worlds for one and the same transaction,” Margrethe Vestager, EU Competition Commissioner, said in a statement.

“The final result seems to be that a significant proportion of the profits recorded by GDF Suez in Luxembourg through the two arrangements are not taxed at all,” the Commission said in a statement.

Separately, Engie plans to cut approximately 1,150 jobs in various support functions, according to French business magazine L’Expansion.

An Engie spokeswoman declined to comment.

Meanwhile, the European Commission also opened an investigation yesterday into a new Polish progressive tax on the retail sector which came into force on September 1 and ordered its suspension until the investigation is concluded.

“The Commission has concerns that the progressive rates based on turnover give companies with a low turnover a selective advantage over their competitors in breach of EU state aid rules,” the EU executive arm said in a statement.

The investigation concerns a tax adopted by Poland in July 2016, which applies to companies that operate in Poland and are active in retail sales.

Under the tax, companies in the retail sector would pay a monthly tax based on their turnover.

Companies with a monthly turnover below 17 million zlotys (£3.3 million) would not pay any tax at all, those with turnover between 17 million zlotys and 170 million zlotys a month would pay 0.8 percent and those above 170 million zlotys would pay 1.4 percent.

“The Commission does not question Poland’s right to decide on its taxation levels or the purpose of different taxes and levies. However, the tax system should respect EU law, including state aid rules, and should not unduly favour a particular type of company, for example companies with lower turnover,” it said.


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