Saturday

13th Aug 2022

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.

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

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.

Almost two-thirds of Europe in danger of drought

Data released by the European Drought Observatory show 60 percent of Europe and the United Kingdom is currently in a state of drought, with farming, homes and industry being affected. Drought conditions have also led to an increase in wildfires.

Brazil pitches itself as answer to Ukraine war food shortages

Brazilian president Jair Bolsonaro is pitching his Latin American country as the answer to the world food crisis following the war in Ukraine. The traditional wheat importer has now exported three million tonnes of the grain so far in 2022.

Opinion

Exploiting the Ukraine crisis for Big Business

From food policy to climate change, corporate lobbyists are exploiting the Ukraine crisis to try to slash legislation that gets in the way of profit. But this is only making things worse.

Stakeholders' Highlights

  1. EFBWW – EFBH – FETBBConstruction workers can check wages and working conditions in 36 countries
  2. Nordic Council of MinistersNordic and Canadian ministers join forces to combat harmful content online
  3. European Centre for Press and Media FreedomEuropean Anti-SLAPP Conference 2022
  4. Nordic Council of MinistersNordic ministers write to EU about new food labelling
  5. Nordic Council of MinistersEmerging journalists from the Nordics and Canada report the facts of the climate crisis
  6. Council of the EUEU: new rules on corporate sustainability reporting

Latest News

  1. Defying Russian bombs, Ukraine football starts 2022 season
  2. Sweden to extradite man wanted by Turkey
  3. EU must beware Beijing's new charm offensive
  4. Forest fire near Bordeaux forces over 10,000 to flee
  5. Estonia and Latvia sever China club ties
  6. Russian coal embargo kicks in, as EU energy bills surge
  7. Only Western unity can stop Iran hostage-diplomacy
  8. Kosovo PM warns of renewed conflict with Serbia

Join EUobserver

Support quality EU news

Join us