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EU extends probe into Belgian tax breaks for foreign companies

European regulators extended their investigation into Belgian tax breaks for financial units of foreign companies.

The European Court of Justice in June partially struck down a European Commission decision saying the Belgian tax policy breached EU rules, ordering the Brussels-based regulator to lay down transitional measures for units affected by the decision. At issue is a policy that gave tax benefits to foreign companies setting up financing and administrative units known as „coordination centers” in Belgium. The centers are a special type of holding belonging to multinational companies, which attract financing, licensing and coordination activities.

The commission extended its probe „to give interested parties the opportunity to submit their observations” before adopting a new decision in line with the court ruling, it said in a statement today. The commission on February 17, 2003, ordered Belgium to withdraw its tax policy or change it in such a way that it complied with EU rules. It said coordination centers approved before December 31, 2000, could continue to benefit from the tax break until the end of December 2010.

The EU court ruled this led to a difference in treatment, saying that that coordination centers whose authorization expired around the time of the EU decision were entitled to a „reasonable transitional period” to adjust to the regime change. (Bloomberg)