Sunday

23rd Jul 2017

EU probes French gas firm's Luxembourg tax dealings

  • Tax rulings "contradict national taxation rules and allow GDF Suez to pay less tax than other companies", competition commissionner Vestager said. (Photo: European Parliament)

The European Commission opened on Monday (19 September) a case over tax rulings granted by Luxembourg to French gas company Engie that it says amount to illegal state aid.

Engie, which was at the time called GDF Suez, is currently owned at 33 percent by the French state.

Thank you for reading EUobserver!

Subscribe now and get 40% off for an annual subscription. Sale ends soon.

  1. €90 per year. Use discount code EUOBS40%
  2. or €15 per month
  3. Cancel anytime

EUobserver is an independent, not-for-profit news organization that publishes daily news reports, analysis, and investigations from Brussels and the EU member states. We are an indispensable news source for anyone who wants to know what is going on in the EU.

We are mainly funded by advertising and subscription revenues. As advertising revenues are falling fast, we depend on subscription revenues to support our journalism.

For group, corporate or student subscriptions, please contact us. See also our full Terms of Use.

If you already have an account click here to login.

The tax rulings the commission is investigating were first issued in 2008 and allowed two GDF Suez companies to lend money to two other GDF companies, with the four entities avoiding taxes due in normal cases.

The two borrowers could make provisions for interest payments, even while the loans were with zero interest, and file them as tax-deductible expenses.

For the lenders, the loans were converted into shares in the borrowing firms. The benefits were not taxed because in Luxembourg equity investments are exempt from taxation.

"A single company cannot have the best of two worlds for one and the same transaction," EU competition commissioner Margrethe Vestager said in a statement.

"Financial transactions can be taxed differently depending on the type of transaction, equity or debt," she pointed out.

The tax rulings allowing the schemes "contradict national taxation rules and allow GDF Suez to pay less tax than other companies", she added.

The decision to open the case comes as Vestager is starting a visit in the US, where the administration and businesses have strongly criticised the commission's sate-aid stance.

The US treasury said last month that the commission's order to Apple to pay over €13 billion to Ireland was "disappointing" and would "undermine the important spirit of economic partnership between the US and the EU”.

The timing of the new case has prompted speculation that Vestager is trying to appease the US by showing she also takes on European firms.

A commission spokesman denied the claims, saying that the commission "always apply state rules to everybody".

The GDF Suez case does not stem from the LuxLeaks revelations published in 2014 but from a review of tax rulings issued in member states that was launched in 2013.

The review was extended in December 2014 after the LuxLeaks revelations, and about 1,000 tax rulings were examined.

The GDF Suez case is the first opened after the review.

The commission did not say how much taxes it estimates GDF Suez avoided with the tax rulings, nor did it say whether it was the only company in that case in Luxembourg.

Greece to get €7.7bn loan next week

The ESM, the eurozone emergency fund, agreed on Friday to unblock a new tranche of aid as part of the bailout programme agreed upon in 2015.

Opinion

Greece needs a new plan

Two years into its third bailout, Greece needs to combine the necessary fiscal targets with a new vision. This can be done in the context of the ongoing industrial revolution.

Opinion

Ceta and pesticides: A citizens' rights issue

The trade agreement with Canada will begin to apply on 21 September. But there is still a potential conflict on the right to data protection vs. the right to access information.

News in Brief

  1. Polish parliament adopts controversial justice reform
  2. GMO opt-out plan unlikely to go anywhere in 2017
  3. Slovak PM threatens to boycott inferior food
  4. France takes Google's 'right to be forgotten' to EU court
  5. Turkey accuses German companies of supporting terror
  6. Israel's Netanyahu caught calling EU 'crazy'
  7. UK does not collect enough data to expel EU nationals
  8. Polish president threatens to veto justice reform

Stakeholders' Highlights

  1. European Jewish CongressJean-Marie Le Pen Faces Trial for Oven Comments About Jewish Singer
  2. ACCAAnnounces Belt & Road Research at Shanghai Conference
  3. ECPAFood waste in the field can double without crop protection. #WithOrWithout #pesticides
  4. EU2017EEEstonia Allocates €1 Million to Alleviate Migratory Pressure From Libya in Italy
  5. Dialogue PlatformFethullah Gulen's Message on the Anniversary of the Coup Attempt in Turkey
  6. Martens CentreWeeding out Fake News: An Approach to Social Media Regulation
  7. European Jewish CongressEJC Concerned by Normalisation of Antisemitic Tropes in Hungary
  8. Counter BalanceOut for Summer Episode 1: How the EIB Sweeps a Development Fiasco Under the Rug
  9. CESICESI to Participate in Sectoral Social Dialogue Committee on Postal Services
  10. ILGA-EuropeMalta Keeps on Rocking: Marriage Equality on Its Way
  11. European Friends of ArmeniaEuFoA Director and MEPs Comment on the Recent Conflict Escalation in Nagorno-Karabakh
  12. EU2017EEEstonian Presidency Kicks off Youth Programme With Coding Summer School

Latest News

  1. Dutch coalition talks lengthiest in 40 years
  2. Polish parliament steps up showdown with EU
  3. EU urges UK to clarify its Brexit positions
  4. Law expert: direct EU powers have become too complicated
  5. Winter is here for Spitzenkandidat, but he'll survive
  6. Mafia money pollutes the EU economy
  7. Central Europe should be wary of Brexit stopping
  8. Poland's 'July coup' and what it means for the judiciary