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

Atlas Copco AB – Annual report – 31 December 2017

Industry: manufacturing

  1. 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). During 2015 Atlas Copco made a provision of MEUR 300 (MSEK 2 802) and paid MEUR 239 (MSEK 2 250) in 2016. Atlas Copco has paid the remaining amount, whereof MEUR 68 (MSEK 655) in the second quarter 2017. MEUR 13 (MSEK 125) is expensed as an interest cost during 2017.

The Belgian government, as well as Atlas Copco, has appealed the decision to the General Court of the European Union (EGC) in Luxembourg. There are several other companies that have been affected by the decision of January 11, 2016 in the same way as Atlas Copco; most of those companies have also appealed to EGC.

Given that the decision by the EGC can be appealed to the European Court of Justice, it will likely take several years until final judgement is rendered. If the judgement is positive for Atlas Copco, the additional taxes paid will be returned to Atlas Copco.