Belgium and EU competition regulators squabble over $750m tax breaks again

LUXEMBOURG, Feb 8 (Reuters) – Belgian and European competition regulators clashed again on Wednesday in Europe’s second-largest court over whether Belgium applies a €700m ($750m) tax scheme to Magnetrol, BP. (BP.L) and 33 other multinational corporations received illegal state aid.

In 2016, the European Commission ordered Belgium to return the money to companies that benefited from the scheme, one of several high-profile cases to pursue sweet tax deals between EU countries and multinational corporations.

Belgium won the first round of their fight in a lower court that overturned the Commission’s decision in 2019. But Europe’s highest court upheld the EU regulator and returned the case to the General Court.

Ireland also won the first round of a lawsuit to recover around 13 billion euros from Apple. (AAPL.O) in 2016.

EU countries hit by tax harassment received a boost last year when the EU’s highest court upheld Fiat Chrysler in its fight against a regulator’s order to pay Luxembourg back €30 million in taxes.

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Belgium on Wednesday brandished the Fiat decision in its case before the General Court.

“The Commission erroneously determined the frame of reference in violation of the method clearly set out in the Fiat decision, namely the determination of the frame of reference should follow from an examination of the content and specific consequences of the rules in accordance with the national law of this state,” Belgian lawyer Marianne Clayton said.

She said that the Commission was also wrong because it did not deal separately with the issues of advantage and selectivity, and also if it was given to companies.

Ireland lawyer Paul Gallagher said the Commission’s approach was technically flawed and violated the EU treaty and national sovereignty.

Commission lawyer Paul John Lowenthal said it was clear the scheme offered tax breaks to multinational corporations, and Belgium had widely touted the measure.

“Multinational corporations get tax breaks if they bring in jobs and investment,” he told the court, citing an advertisement from the Belgian finance ministry.

The court will hear arguments from some companies on Thursday and next week. Housing T-131/16 RENV.

($1 = €0.9308)

Reporting by Fu Yong Chi; Edited by Arun Koyyur

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