The General Court of the European Union has upheld the European Commission's Decision that Belgium's tax scheme, which targeted 'excess' profits, constitutes an aid scheme that is unlawful and incompatible with the internal market. T Tax rulings regarding specific profits generated by Belgian entities within multinational corporate groups were issued. In this context, 'excess' profits—those surpassing the profit comparable standalone entities would have made in similar circumstances—were exempt from corporate income tax.
In 2016, the European Commission had found the scheme to be incompatible with the internal market, ordering the recovery of the aid granted. The General Court annulled the Commission's decision in 2019. However, on appeal, the Court of Justice set aside the General Court's judgment, confirming the Commission's accurate identification of the aid scheme and referring the case back to the General Court. In this context, the General Court ruled for the second time on the matter, this time upholding the Commission's 2016 finding that the Belgian tax scheme infringes EU State aid rules.
Central to the General Court's judgment was the scheme’s selectivity towards entities forming part of multinational groups, granting them an excess profit exemption, unlike those subjected to standard Belgian corporate income tax. Additionally, the General Court found that the scheme was also selective because it was not open to companies that had decided not to make investments, centralise activities or create employment in Belgium, and because it was not open to undertakings that were part of a small group.