European Competition Commissioner Margrethe Vestager addresses a press conference on Belgium's excess profit tax scheme at the European Commission in Brussels on Monday. Picture: AFP PHOTO/EMMANUEL DUNAND
European Competition Commissioner Margrethe Vestager addresses a press conference on Belgium's excess profit tax scheme at the European Commission in Brussels on Monday. Picture: AFP PHOTO/EMMANUEL DUNAND

BRUSSELS — The European Union (EU) on Monday said the tax breaks Belgium offered to major multinationals, including beer giant Anheuser-Busch InBev (AB InBev) and British American Tobacco (BAT), were illegal, and ordered the companies to return €700m in unpaid taxes.

The case is the latest in the wake of last year’s "Luxleaks" scandal, which disclose details of tax breaks given to dozens of major firms in Luxembourg when current European Commission head Jean-Claude Juncker was prime minister.

"The European Commission has concluded that selective tax advantages granted by Belgium under its ‘excess profit’ tax scheme are illegal under EU state aid rules," Competition Commissioner Margrethe Vestager told a press conference.

The case involved 35 multinationals, Ms Vestager said.

"Belgium has given a select number of multinationals substantial tax advantages that break EU state aid rules. It distorts competition on (merit) by putting smaller competitors who are not multinational on an unequal footing."

The EU has also launched investigations into other countries’ tax deals: US tech giant Apple’s deals with Ireland, coffee-shop chain Starbucks with the Netherlands and McDonald’s with Luxembourg.

In October the Commission decided that Luxembourg and the Netherlands had granted selective tax advantages to Fiat and Starbucks, respectively.

EU rules say some tax breaks offered to big companies breach the bloc’s rules on state aid, as they amount to a government subsidy that is aimed at attracting multinationals to do business in certain countries.

Belgium’s system, dubbed Only in Belgium, allows companies to reduce tax by registering "excess profits" that allegedly result from the advantage of being part of a multinational group.

But Ms Vestager said those tax breaks should be available for stand-alone companies or Belgian groups, rejecting Belgium’s claims that the system avoided "double taxation" in two or more countries.

AFP