This Tuesday a delegation of the European Parliament’s special committee on tax rulings and similar measures has completed its first country visit to a Member State with a problematic ruling practice. Visits to at least the UK, Luxembourg, the Netherlands, Ireland and Switzerland will follow. The programme included discussions with tax experts, the Belgium parliament and the commission responsible for tax rulings. On the lessons from this visit Green committee members Sven Giegold and Philippe Lamberts conclude:
Belgium authorities admitted breaching EU law by not exchanging rulings with other member states from before 1.1.2015 as required by the EU directive on administrative cooperation. It is a weak and unconvincing excuse that Belgium has only received one ruling from another EU member state. There is no equality of illegality. But it demonstrates that the exchange of rulings continues to be dysfunctional.
High ranking Belgian officials had to admit and confirmed that Belgium is a corporate tax haven depriving other states of legitimate corporate tax income. The Belgian ruling office stated that maybe in the future other states will be able to tax what they ought to be able to tax, admitting that the current Belgian ruling practice means that other member states of the EU loose legitimate tax income. Excess profit rulings reduce artificially the taxable profit by up to 50-90% opening the door for double-non-taxation.
Belgium makes a mockery of economic substance requirements in corporate taxation putting in its advertisement brochures „ substance“ even in brackets. Consequently its tax laws allow fictitious companies to channel billions of Euros through the country, sometimes with as little as 1-2 employees. For example Fortum Project Finance NV, part of the Finish FORTUM company, used the Belgian notional interest regime at the level of about 200 million Euros per year while employing only 1,8 full time equivalent staff.
While the system was boosted and fully developed under Verhofstad, Reynders and Michel, during the special committee’s exchange with the Belgian chamber of deputies it became clear that today the strongest defenders of the status quo of such tax robbery is the liberal VLD,which effectively accuses critics of the system of being anti-Belgian. They continue to defend the principle of tax competition in the common market. This rhymes well with the MR’s Louis Michel’s most recent activity of promoting Belgian rulings in Japan.
The material to document the Belgium tax haven can be downloaded here: