The European Union (EU) has ordered a probe into favourable tax rulings for multinational firms in Belgium.
Multinationals in Belgium can exclude those profits from their tax bills profits that come from the perceived benefits of being an international company, such as research and development funds and economies of scale, along with intangible assets such as reputation.
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The EU competition commissioner Margrethe Vestager said that this can cut down a company’s tax bill by up to 90%.
The excess profit rulings are aimed at attracting foreign companies to the country.
The commission said that the rulings breach EU state aid rules by offering unfair advantage to only multinationals, and distorting competition within the bloc.
Vestager said, "It appears that the deals are only struck with companies that move substantial parts of their businesses to Belgium.
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By GlobalData"If our concerns are confirmed, this generalised scheme would be a serious distortion of competition unduly benefiting a selected number of multinationals."
Similar state aid investigations have been earlier carried out into the operations of Apple in Ireland, Starbucks in the Netherlands and Amazon and Fiat in Luxembourg.
