Gas giant Engie’s Luxembourg tax deals under EU scanner

Brussels / AFP

The EU launched an in-depth probe on Monday into alleged sweetheart tax deals between French gas group Engie and Luxembourg, taking on a major European multinational after
similar high-profile investigations into US giants.
“The Commission has concerns that several tax rulings issued by Luxembourg may have given GDF Suez (now Engie) an unfair advantage over other companies, in breach of EU state aid rules,” the European Union’s executive arm said in a statement.
The probe into a company owned in part by the French state comes days after the Commission angered Washington by ruling that US tech icon Apple had received favourable tax terms that amounted to state aid and ordered it to repay 13 billion euros ($14.5 billion) in back-taxes in Ireland.
The investigation into one of France’s biggest companies opens on the same day as a visit by EU Competition Commissioner Margrethe Vestager to Washington, where she is to meet top US officials amid continued complaints over her Apple decision.
“We will look carefully at tax rulings issued by Luxembourg to GDF Suez,” Vestager said in the Commission
statement.
“They seem to contradict national taxation rules and allow GDF Suez to pay less tax than other companies,” she added.
The Commission said Luxembourg is suspected of having afforded Engie subsidiaries different tax treatments for similar types of transactions, lowering the company’s overall tax exposure significantly.
Luxembourg’s tax authorities “appear to treat the same financial transaction between companies of GDF Suez in an inconsistent way,” the Commission said.
This resulted in tax breaks “which are not available to other companies subject to the same national taxation rules in Luxembourg,” it added.
The Luxembourg government rejected the charge but said it would cooperate fully with the probe and stressed that an investigation in no way presumed guilt.
“Luxembourg believes that no special tax treatment was accorded to Engie companies in the country,” the finance ministry said in a short
statement.
The tiny EU nation has been under intense scrutiny since the LuxLeaks revelations in 2014 showed that current European Commission President Jean-Claude Juncker gave companies huge tax breaks, known as tax rulings, while he was Luxembourg prime
minister.
Documents leaked by former PricewaterhouseCoopers employees in the country revealed tax breaks that Luxembourg offered to huge international to firms including Apple, IKEA and Pepsi.
The revelations ended up forcing the EU to take urgent steps to stop global firms avoiding tax in Europe, including inquiries into firms like Apple, McDonald’s and Amazon.
The cases cited by the Commission on Monday date back to 2008 when Juncker was at the helm in
Luxembourg.
GDF Suez now Engie is a French electric utility company of which the French state owns about 33 percent.

EU’s executive starts probe of Poland’s new levy on retailers

Bloomberg

The European Commission opened a probe into Poland’s new tax on retailers that imposes a smaller levy on shops with lower sales.
The levy, which entered into force on Sept. 1, may breach state-aid rules because the progressive tax “has the effect that companies with low turnover either pay no retail tax or pay substantially lower average rates than companies with high turnover,” the EU’s executive said. In January, the Commission started another investigation against Poland amid concerns the new government isn’t adhering to the bloc’s democratic standards.
The new retail levy was advocated by the new government as the tool to increase competitiveness of smaller and family-run retailers that lose market share to foreign-backed rivals, such as Portugal’s Jeronimo Martins SGPS SA’s Biedronka stores, Tesco Plc and Germany’s Schwarz Beteiligungs-GmbH’s Lidl shops. The Finance Ministry, which forecast the tax to add 473 million zloty ($128 million) in budget revenue this year, said it will respond to the EU’s investigation on Tuesday.