As the EU continues to clamp down on “sweetheart” tax arrangements, it has found an “excess profit” tax scheme in Belgium to be illegal.
It has obliged the country to recover €700 million in illegal tax breaks.
In 2005 Belgium introduced a scheme to let companies reduce their corporate tax by as much as 90%, according to the European Commission.
This is the latest tax scheme to be found to contradict the EU rules on state aid. The EU has ruled against similar arrangements for Starbucks in the Netherlands and Fiat in Luxembourg. Both countries said they will appeal.
An investigation into McDonald’s tax affairs is underway along with Apple and Amazon with Ireland and Luxembourg.
Margrethe Vestager, EU competition commissioner, said Belgium's tax breaks "distorted" competition by favouring large multinationals over smaller companies.
"National tax authorities cannot give any company, however large, however powerful, an unfair competitive advantage compared to others," said Ms Vestager.
"If a country gives certain multinationals illegal tax benefits that allow them to avoid paying taxes on the majority of their actual profits, it seriously harms fair competition in the EU, ultimately at the expense of EU citizens."
