EC investigates Belgian excess profit rulings
Recently, the European Commission announced the investigation of so-called excess profit rulings in Belgium.
The Belgian tax authorities have introduced these rulings in 2004 to acknowledge that being part of a (large) multinational can be beneficial for stand-alone Belgian companies. Economies of scale or for instance group synergies may increase the profit potential of stand-alone Belgian entities.
With these excess profit rulings in Belgium, (part of) this benefit is not allocated to the Belgian entity by creating an extra deduction in the Belgian tax return.
The European Commission will probably investigate whether the allowed ‘deduction’ is consistent with transfer pricing principles. If that is not the case, there is a risk that tax payers that have obtained an “excess profit ruling” need to repay the benefit (lower Belgian corporate income tax) if these rulings also are qualified as state aid.back to overview