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EU To Probe Luxembourg Tax Ruling For GDF Suez

by Ulrika Lomas, Tax-News.com, Brussels

19 September 2016


The European Commission has opened an in-depth investigation into Luxembourg's tax treatment of the GDF Suez group, now known as Engie, which it says could amount to illegal state aid.

According to a statement issued on September 19, the Commission has concerns that several tax rulings issued by Luxembourg may have given GDF Suez an unfair advantage over other companies, in breach of EU state aid rules. Engie is a multinational electric utility company.

The Commission will investigate whether Luxembourg tax authorities "selectively derogated" from provisions of national tax law in tax rulings issued to GDF Suez by treating the same financial transaction between companies of GDF Suez inconsistently. The EC suspects that the transactions in question were treated as both debt and as equity.

After carrying out a preliminary assessment, the Commission is of the view that these tax rulings gave GDF Suez "a considerable economic advantage not available to other companies subject to the same national tax rules." If confirmed, this would amount to illegal state aid, which Luxembourg could then be directed to recover from the taxpayer.

Margrethe Vestager, Commissioner in charge of Competition Policy, said: "Financial transactions can be taxed differently depending on the type of transaction, equity or debt - but a single company cannot have the best of two worlds for one and the same transaction. Therefore, we will look carefully at tax rulings issued by Luxembourg to GDF Suez. They seem to contradict national taxation rules and allow GDF Suez to pay less tax than other companies."

However, the EC's statement stressed that the investigation does not call into question the general tax regime of Luxembourg.

"The opening of an in-depth investigation gives interested third parties and the member states concerned an opportunity to submit comments. It does not prejudge the outcome of the investigation," the Commission explained.

TAGS: tax | European Commission | interest | law | corporation tax | Luxembourg | transfer pricing | European Union (EU) | Europe | BEPS

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