EC decision regarding Belgian tax rulings on excess profits as illegal state aid, provisions, payments and appeals

Atlas Copco AB – Annual report – 31 December 2019

Industry: manufacturing

9. Taxes (extract)
European Commission’s decision on Belgium’s tax rulings
On January 11, 2016, the European Commission announced its decision that Belgian tax rulings granted to companies with regard to “Excess Profit” shall be considered as illegal state aid and that unpaid taxes shall be reclaimed by the Belgian state. Atlas Copco had such tax ruling since 2010.

Following the European Commission decision, Atlas Copco has paid, in total, MEUR 313 (MSEK 2 952). In 2015, Atlas Copco made a provision of MEUR 300 (MSEK 2 802) and paid MEUR 239 (MSEK 2 250) in 2016. In the second quarter of 2017, Atlas Copco paid the remaining amount of MEUR 68 (MSEK 655). During 2017, MEUR 13 (MSEK 125) was expensed as an interest cost.

The Belgian government, as well as Atlas Copco, appealed the decision to the General Court of the European Union (EGC) in Luxembourg and on February 14, 2019 the EGC annulled the decision taken by the European Commission on January 11, 2016.

On May 3, 2019, the European Commission appealed the EGC’s annulment. On September 16, 2019, the European Commission also announced the decision to open 39 separate, in-depth investigations to assess if each specific decision granted by Belgium between 2005 and 2014 regarding tax rulings granted to multinationals with regard to “Excess Profit” violated the EU rules for state aid. One of these 39 separate in-depth investigations concerns Atlas Copco. It is likely several years before a final decision is made.