EU Commission treats certain Luxembourg tax rulings as 'State aid'

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June 2018


On June 20, the European Commission (EC) issued a press release concerning its final decision in the State aid investigation into tax rulings granted by the Luxembourg tax authorities to GDF Suez group (now Engie) (the Group), in relation to the treatment of certain financing transactions. The EC considered that the Group received an undue advantage and requested recovery of up to EUR 120 million of tax. The EC has not yet made public the text of the final decision.

The takeaway

The decision is the latest in a number of high-profile cases concerning the EC’s approach to State aid and taxation.

While a number of the recent cases involve transfer pricing matters, the GDF Suez decision appears to focus on the analysis that the arrangement gives rise to a deduction of an expense without a corresponding income inclusion.  The EC’s concerns may echo BEPS Actions and matters that have been further addressed through the European Union’s anti-tax avoidance directives (ATAD I and ATAD II).

The text of the decision will be important to help taxpayers understand the EC’s detailed reasoning and position with respect to State aid.

As with the prior cases, we expect that Luxembourg will appeal the decision to the General Court of the European Union.

In the meantime, note that the General Court will hear appeals from some of the earlier cases over the next few weeks.

Contact us

Maarten Maaskant

International Tax Desk Leader, PwC US

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