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Reuters/Francois Lenoir
And the total tax bill on this comes to….
DAY OF RECKONING

Europe is slowly undoing all those cushy tax deals for multinationals

By Aamna Mohdin

The European Commission has ruled that Belgium’s so-called sweetheart tax deals amounted to illegal state aid and it has asked the country to recover €700 million ($765 million) from the multinational companies who benefited from this tax break since 2005.

Europe’s competition commissioner Margrethe Vestager denounced Belgium’s “excess profit” scheme, which gave specific multinationals a tax break based on the assumption that they would make large profits for just being a multinational company, and which resulted in some companies not paying taxes on more than 50% of their profits—and up to 90%, in some cases.

The ruling affects 35 multinationals, mostly European, none of which were named “at this stage because the Commission assessed and found the scheme itself illegal.” However, the list is said to include brewer Anheuser-Busch InBevcurrently pushing through a deal that could see it sell a third of the world’s beer—as well as oil giant BP, German chemicals firm BASF, and French fashion firm Celio, according to multiple reports.

The ruling follows previous investigations that found Luxembourg’s tax break to Fiat and Starbucks’ deal in the Netherlands amounted to illegal state aid. So the honeymoon period, it seems, is finally ending for multinationals.

The Commission is also continuing its investigation into tax rulings in Ireland, which a study concluded was indeed a tax haven. Ireland has one of the lowest corporate tax rates in the developed world—Apple had paid as little as 2%. Despite increased pressure to shut down its tax avoidance strategy, Ireland announced an even lower corporate tax rate—6.25%—on earnings from some research and development.

It is also investigating the infamous tax haven Luxembourg, where tax deals for some 340 multinational companies were recently leaked.