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

Atlas Copco AB – Annual report – 31 December 2018

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. 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, 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 European Commission, following the decision by the EGC that was announced on February 14, 2019, can take alternative courses of actions if it wants to continue claiming its state-aid position, it will likely take several years until the final outcome is known. See note 29 for further information.

  1. Subsequent events

On February 14 2019, the General Court of the European Union annulled the European Commission’s decision of January 11, 2016 that certain Belgian tax rulings granted to multinationals with regard to “Excess Profit” shall be considered as illegal state aid. The 2016 decision, which Atlas Copco appealed, concerned the years 2010–2015. As communicated earlier, Atlas Copco paid the amount to cover the potential liability, in total MEUR 313 (MSEK 2 952), to the Belgian Government to avoid further interest charges. The Commission can appeal the decision to the European Court of Justice within approximately two months from the date of the annulment.

 

 

 

 

 

 

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