EU tells Luxembourg to recover 120 mn euros from French energy giant

June 20, 2018
Engie's biggest shareholder is the French state

The EU on Wednesday ruled that Luxembourg had given illegal tax breaks to energy giant Engie and ordered it to recover 120 million euros from the company, whose biggest shareholder is the French state.

An investigation by the European Commission found Luxembourg had allowed two Engie group companies to avoid paying taxes on almost all their profits for about a decade by means of complex financing structures.

"Luxembourg gave illegal tax benefits to Engie," EU Competition Commissioner Margrethe Vestager said in a statement.

"Engie paid an effective corporate tax rate of 0.3 percent on certain profits in Luxembourg for about a decade. This selective tax treatment is illegal."

Brussels launched an in-depth probe in 2016 into tax rulings by Luxembourg which the commission said "artificially lowered" Engie's tax bill "without any valid justification".

The arrangement centred around Engie LNG Supply, which trades liquified natural gas products in Luxembourg, and Engie Treasury Management, which manages financing within the group.

In 2008 Engie set up an arrangement that allowed it to treat the same transaction as both equity and debt and thereby make significant deductions from Engie LNG Supply's taxable profits.

The Luxembourg authorities then endorsed the structure with a tax ruling.

"Luxembourg must now recover about 120 million euros in unpaid tax from Engie, plus interest," the commission said.

Luxembourg, which has been hit by several EU tax investigations including one last year that led the commission to order web retail giant Amazon to pay 250 million euros in back taxes, insisted that the Engie arrangements were within the rules at the time.

"As Engie has been taxed in accordance with the tax rules applicable at the relevant time, without having received a selective treatment, Luxembourg considers that Engie has not been granted State aid incompatible with the internal market," the Luxembourg government said in a statement.

However it acknowledged that the result of the Engie arrangements "no longer correspond to the current spirit of the national and international tax framework".

Explore further: EU to decide Amazon tax break case: sources

Related Stories

EU to decide Amazon tax break case: sources

October 3, 2017

The EU will on Wednesday decide a landmark case against Luxembourg, which stands accused of giving illegal tax breaks to internet shopping giant Amazon, according to two sources familiar with the matter.

Amazon must pay $295 million in back taxes, EU says

October 4, 2017

Amazon has to pay $295 million in back taxes to Luxembourg, the European Union ordered Wednesday, in its latest attempt to tighten the screws on multinationals it says are avoiding taxes through sweetheart deals with individual ...

EU tax move on Apple not anti-US bias: Vestager

September 19, 2016

Europe's powerful Competition Commissioner Margrethe Vestager said Monday that the EU order for Apple to pay $15 billion in taxes did not represent any bias against US companies.

EU broadens corporate tax crackdown to Amazon (Update)

October 7, 2014

The European Union is broadening its crackdown on multinationals' tax avoidance schemes, opening Tuesday an investigation into Amazon's practices on suspicion the online retailer is not paying its dues on profits made across ...

Transatlantic tussles: EU cases against US firms

October 4, 2017

The EU's decision to slap Amazon with a multi-million euro tax bill and take Ireland to court for not complying with a landmark case against Apple are the latest in a string of competition cases against US firms.

Recommended for you

Inert nitrogen forced to react with itself

March 21, 2019

Constituting over 78 % of the air we breathe, nitrogen is the element found the most often in its pure form on earth. The reason for the abundance of elemental nitrogen is the incredible stability and inertness of dinitrogen ...

Two-step path to shrinking worker bee gonads

March 21, 2019

The dramatic difference in gonad size between honey bee queens and their female workers in response to their distinct diets requires the switching on of a specific genetic program, according to a new study publishing March ...

Plant immunity cut to size

March 21, 2019

An international team based in Ghent, Belgium (VIB-UGent Center for Plant Systems Biology) and Basel, Switzerland (University of Basel), found a link between a class of enzymes and immune signals that is rapidly triggered ...


Please sign in to add a comment. Registration is free, and takes less than a minute. Read more

Click here to reset your password.
Sign in to get notified via email when new comments are made.