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Category: EU State Aid

The definition of state aid is found in Article 107(1) TFEU. In order for state aid to be present all of the following four conditions need to be fulfilled:

  • Aid must be present; i.e. a financial advantage such as a tax benefit. Such aid must be granted by an EU Member State (or any lower level of government) or through state resources, in a manner attributable to that state.
  • Such aid should distort or threaten to distort competition and affect trade between EU Member States.
  • Such aid should favor certain undertakings or the production of certain goods; i.e. it needs to be ‘selective’.

In 2001, the EU Commission launced a number of investigations into “transfer pricing schemes” launched by Belgium, Luxembourg and the Netherlands in relation to Apple, Starbucks, Fiat,  and Amazon.

Commission opens in-depth investigation into tax treatment of Huhtamäki in Luxembourg

The European Commission has now opened an in-depth investigation to examine whether tax rulings granted by Luxembourg to Finnish food and drink packaging company Huhtamäki may have given the company an unfair advantage over its competitors, in breach of EU State Aid rules. Margrethe Vestager, Commissioner in charge of competition policy, said: “Member States should not allow companies to set up arrangements that unduly reduce their taxable profits and give them an unfair advantage over […]

European Commission vs Belgium and Ireland, February 2019, General Court Case No 62016TJ0131

In 2016, the Commission requested that Belgium reclaim around €700 million from multinational corporations in what the Commission found to be illegal state aid provided under the Belgian “excess profit” tax scheme. The tax scheme allowed selected multinational corporations to exempt “excess profits” from the tax base when calculating corporate tax in Belgium. The European Court of Justice concludes that the Commission erroneously considered that the Belgian excess profit system constituted an aid scheme and […]

The European Commission opens in-depth investigation into tax treatment of Nike and Converse in the Netherlands

The European Commission has opened an in-depth investigation to examine whether tax rulings granted by the Netherlands to Nike may have given the company an unfair advantage over its competitors, in breach of EU State aid rules. Margrethe Vestager, Commissioner in charge of competition policy, said: “Member States should not allow companies to set up complex structures that unduly reduce their taxable profits and give them an unfair advantage over competitors. The Commission will investigate […]

European Commission vs McDonald, December 2018, European Commission Case no. SA.38945

The European Commission found that Luxembourg did not grant illegal State aid to McDonald’s as a consequence of the exemption of income attributed to a US branch.

…it is not established that the Luxembourg tax authorities misapplied the Luxembourg – US double taxation treaty. Therefore, on the basis of the doubts raised in the Opening Decision and taking into account its definition of the reference system, the Commission cannot establish that the contested rulings granted a selective advantage to McD Europe by misapplying the Luxembourg – US double taxation treaty.

European Commission concludes on investigation into Luxembourg’s tax treatment of McDonald’s under EU state aid regulations, September 2018

Following an investigation into Luxembourg’s tax treatment of McDonald’s under EU state aid regulations since 2015, the EU Commission concluded that the tax rulings granted by Luxembourg to McDonald’s in 2009 did not provide illegal state aid. According to the Commission, the law allowing McDonald’s to escape taxation on franchise income in Luxembourg – and the US – did not amount to an illegal selective advantage under EU law. The double non-taxation of McDonald’s franchise […]

European Commission’s investigations into member state transfer pricing and tax ruling practices

Since June 2013, the European Commission has been investigating tax ruling practices of EU Member States. A Task Force was set up in summer 2013 to follow up on allegations of favourable tax treatment of certain companies, in particular in the form of unilateral tax rulings. The Treaty on the Functioning of the European Union (“TFEU”) provides that “any aid granted by a Member State or through State resources in any form whatsoever which distorts […]

Apple – Taxes and Transfer Pricing

Apple’s tax affairs have been in the spotlight of tax authorities for decades – and still are! Settlements have been entered with numerous European Countries, among others – Italy, the UK and France. Apple has also been investigated by the EU and a State Aid ruling was issued in August 2016. According to the ruling “Ireland granted illegal tax benefits to Apple” and the European Commission ordered Apple to pay €13 billion, plus interest, in […]

European Commission vs. Netherlands and IKEA, Dec. 2017

The European Commission has opened an in-depth investigation into the Netherlands’ tax treatment of Inter IKEA, one of the two groups operating the IKEA business. The Commission has concerns that two Dutch tax rulings may have allowed Inter IKEA to pay less tax and given them an unfair advantage over other companies, in breach of EU State aid rules. Commissioner Margrethe Vestager in charge of competition policy said: “All companies, big or small, multinational or […]

EU blacklist of non-cooperative tax jurisdictions

On December 5, 2017, the EU published it’s blacklist of non-cooperative tax jurisdictions (tax havens). 1. American Samoa American Samoa does not apply any automatic exchange of financial information, has not signed and ratified, including through the jurisdiction they are dependent on, the OECD Multilateral Convention on Mutual Administrative Assistance as amended, does not apply the BEPS minimum standards and did not commit to addressing these issues by 31 December 2018. 2. Bahrain Bahrain does […]

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