Commission Takes Ecofin To ECJ Over Belgian Tax Break

by Ulrika Lomas, Tax-News.com, Brussels

21 July 2003

According to reports released at the end of last week, the European Commission has decided to take the Finance Ministers' Council to the European Court of Justice as a result of Ecofin's decision to grant Belgium an extension on an 'illegal' tax break.

The case relates to a law which allows multinational firms with headquarters in Belgium ('coordination centres') to be taxed on their operating costs rather than their revenues, a situation the Commission considers is a breach of illegal state aid rules.

Ecofin permitted the continuation of the preferential tax scheme to Belgium back in January of this year as part of a compromise deal to salvage the Savings Tax Directive talks. However, according to newspaper Le Soir, the Commission has in the meantime ordered the tax break which is still in operation for 36 firms to be eliminated.

In a statement to the ECJ last week, the Commission said: "A decision by the (Ecofin) council relating to aid for which the commission has already legislated is an attack on the institutional balance of powers."

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