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MEPs Say State Aid Probe 'Windfall' Should Be Divvied Up

by Ulrika Lomas,, Brussels

20 January 2016

Where money is recovered from a company that benefited from illegal state aid, this money should be returned not to the same member state, but to member states that have suffered an erosion of their tax bases or to the EU budget, Members of the European Parliament have agreed.

A European Parliament plenary on January 19 approved the report by Werner Langen (EPP, DE), by 500 votes to 137, with 73 abstentions. MEPs also pressed for a review of the current Value Added Tax (VAT) Directive, in order to make it more fraud resistant.

The report welcomes the state aid investigations initiated by the Commission in 2014 into favorable tax ruling decisions for Starbucks (the Netherlands), Fiat (Luxembourg), Amazon (Luxembourg), and Apple (Ireland) and the subsequent investigations into all 28 member states' tax ruling practices. It calls on EU member states to cooperate fully with these investigations and with the ongoing work of Parliament's Special Committee on Tax Rulings II.

Earlier this month, the Commission concluded that "selective tax advantages" granted by Belgium under its "excess profit" tax scheme are illegal under EU state aid rules. The Commission said that the scheme has benefited at least 35 multinationals, mainly from the EU, who must now make payments to return the state aid, said to be worth EUR700m.

In October 2015, the Commission decided that Luxembourg's tax ruling for Fiat Finance and the Netherlands's ruling for Starbucks do not reflect economic reality such that they grant selective tax advantages to the two companies in breach of EU law.

The Commission has yet to decide on other tax rulings, including Ireland's rulings for Apple and Luxembourg's rulings for Amazon and McDonald's.

TAGS: Finance | tax | investment | business | European Commission | Belgium | Ireland | Netherlands | tax avoidance | law | budget | Luxembourg | enforcement | agreements | multinationals | tax planning | transfer pricing | advance pricing agreement (APA) | tax reform | regulation | trade | European Union (EU) | business investment | Europe | Tax | BEPS

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