EU Commission: Scheme of Belgium Excess Profit Does Not Constitute State Aid

; posted on
February 20th, 2019

The General Court of the European Union issued a judgment that annuls a January 2016 State aid decision of the European Commission concerning Belgium's excess profit rulings.


Since 2005 Belgium has applied a system of exemptions for the excess profit of Belgian entities which form part of multinational corporate groups. The profits ae regarded as being 'excess', if they exceeded the profit that would have been made by comparable standalone entities operating in similar circumstances. Such excess profit would be exempted from the corporate income tax.

In order to get the exemption, the entities should apply for tax ruling. Those entities could obtain an advance ruling from the Belgian tax authorities, if they are able to demonstrate the existence of a new situation, such as a reorganization leading to the relocation of the central entrepreneur to Belgium, the creation of jobs or investments.

In 2016, the Commission found that this system of excess profit exemptions constituted a State aid scheme which was incompatible with the internal market and unlawful and ordered the recovery of the aid thus granted from 55 beneficiaries.


The General Court annuls Commission State Aid Decision on Belgium's Excess Profit Rulings due to these following reasons:

  • The fact that the Belgian tax authorities had a margin of discretion over all of the essential elements of the excess profit rulings, allowing them to influence the amount and the characteristics of the tax exemption and the conditions under which the exemption was granted, precludes the existence of an aid scheme.
  • The excess profit exemptions did not follow automatically from Belgian tax law, but necessarily depended on the adoption of further implementing measures (i.e., tax rulings) by the Belgian tax authorities.

Furthermore, the General Court notes that it cannot be concluded that the beneficiaries of the alleged aid scheme are defined in a general and abstract manner or that there was actually a systematic approach on the part of the Belgian tax authorities as regards all of the advance rulings concerned. Therefore, wrongly considered that the Belgian system relating to the excess profit constituted an aid scheme.


To the extent the Commission files an appeal against the General Court’s judgment, it may well await the outcome of that appeal, as the process will take another two-three years before potentially looking into individual excess profit rulings. If there is an appeal by the Commission, the Belgian tax authorities are unlikely to repay any of the recovered aid before the Court of Justice rules on the appeal.

Source: General Court Of The European Union

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