State aid: Belgian Carat Tax

Companies in Belgium are subject to a 33.99% tax on profit, meaning companies in competing diamond centres such as Dubai or Hong Kong, taxed at 16.5%, are biting at their heels. After years of discussion between the Antwerp diamond industry and the Belgian Government, in 2015 it was decided to introduce the "Diamond Regime" tax system, pending European Commission approval.

On 29 July 2016, the European Commission announced that the fiscal regime does not constitute State aid, and gave the green light for the "Carat Tax". Implementation of this new tax regime will put an end to complex discussions between the Antwerp diamond industry and tax authorities on the control and valuation of diamond traders' stock.

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https://www.linkedin.com/pulse/state-aid-belgian-carat-tax-dirk-de-wolf?trk=hp-feed-article-title-publish

Belgium's excess profit tax ruling system

On 11 January 2016, the European Commission (EC) again used Tax State Aid arguments to combat tax planning by multinationals when it announced its final decision in the formal state aid investigation into the Belgian 'excess profit rulings'. Under the Belgian 'excess profit' tax scheme,  applicable since 2005, multinationals are permitted in certain circumstances to write down their actual taxable profits by comparison with the hypothetical profit that a stand-alone company would have made in a comparable situation.

The EC concluded that the rulings only benefit multinational groups whilst Belgian companies only active in Belgium could not claim similar benefits. The rulings, therefore, represented a distortion of competition within the EU's Single Market. The EC also concluded that the 'excess profit rulings' constitute illegal state aid and estimated that Belgium needs to recover around 700 million Euro in total from at least 35 multinationals.

Belgium, other Member States, the beneficiaries of the 'excess profit rulings' or other parties who are directly and individually concerned by the decision may challenge it before the EU General Court under Article 263 of the TFEU. Belgium filed its appeal against the decision on 22 March 2016. In the action for annulment, the Belgian Government focused on a number of arguments, which encompass various pleas in law referring to the procedural aspects of the EC investigation and specific arguments given by the EC in the final Decision.

More information:

https://www.linkedin.com/pulse/state-aid-belgian-excess-profit-rulings-dirk-de-wolf?trk=hp-feed-article-title-publish