European Commission finds the Belgian excess profit ruling system as unlawful fiscal state aid, some EUR 700 million to be recovered

On 11 January 2016 the European Commission (EC) adopted its final decision regarding the Belgian excess profit ruling system and concluded that this system constitutes unlawful fiscal State Aid. Among the key parameters of this decision have been that a) this system is only available to a limited number of multinational companies and not available to stand-alone companies only active in Belgium, b) that the system may result in the exemption of a significant part of the income of Belgian companies, resulting in double non-taxation and c) that the system derogates from normal practice under Belgian company tax rules and the “arm’s length principle under EU state aid rules”.

The EC thereby largely confirms its preliminary conclusions as per its opening decision published on 5 June 2015. The Belgian government is now ordered to take all necessary actions to recover the State Aid granted, which based on the press release of the EC, is estimated at some EUR 700m. If the case is litigated before the European Courts (which appears likely), the Court of Justice of the European Union will ultimately decide on the fiscal State Aid nature of this measure.

This decision should be seen in the light of a number of recent investigations by the EC in respect of the use of tax rulings concerning the application of the transfer pricing rules and the arm’s length standard. The EC already issued negative final decisions regarding Fiat in Luxembourg and Starbucks in The Netherlands, while the EC’s final decisions into Apple in Ireland and Amazon in Luxembourg are expected in the coming months.

Read more.

Our previous publications regarding this topic:

European Commission opening in-depth investigation into Belgian tax provision

EU Fiscal aid – a briefing document

EU: Formal EU State Aid investigation into certain tax rulings

European Commission – Press release dated 11 January 2016

For further information, please contact your PwC advisor or the contacts listed below:

Armin Marti
Partner, Leader Corporate Tax Switzerland
+41 58 792 4343

Anna-Maria Widrig Giallouraki
Senior Manager, International Tax
+41 58 792 4287

EUDTG Newsletter September – October 2015

EU direct tax law is a fast developing area. This presents taxpayers, in particular groups and multinational corporations that have an EU or European Economic Area (EEA) presence, with various opportunities.


The following topics are covered in this issue of EU Tax News:


CJEU Cases

  • Austria: CJEU Judgment on Austrian goodwill amortization: Finanzamt Linz
  • Netherlands: CJEU Judgment on discriminatory treatment of foreign shareholders receiving dividends from Dutch sources: Miljoen, X and Société Générale

National Developments

  • Finland: Proposed changes to domestic dividend taxation based on amendment to the EU Parent-Subsidiary Directive
  • Italy: New provisions on value attribution to assets of companies transferring place of residence to Italy
  • Italy: New provisions on horizontal tax consolidation
  • Italy: New branch exemption provisions
  • Spain: National High Court of Justice judgment on tax discrimination of UK UCITS
  • Spain: High Court of Justice of Madrid judgment on US investment funds
  • United Kingdom: First Tier Tribunal judgment about tax treatment of the statutory interest on repaid VAT
  • United Kingdom: 45% corporation tax on restitution interest

EU Developments

  • EU: EU-28 political agreement on automatic exchange of information of advance cross-border tax rulings and APAs
  • EU: European Commission launches public consultation on new proposal for CCCTB

Fiscal State aid

  • EU: European Commission final decisions on Starbucks Manufacturing BV and Fiat Finance and Trade
  • Spain: Amendment to General Tax Act regarding the State aid recovery procedure
  • Spain: Two High Court judgments on State aid regarding exemption from Spanish immovable property tax


Read the full newsletter here.


This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG).

Further information about our service offerings in EU taxes:


EUDTG Newsletter 2015 – nr. 005 (July – August 2015)

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG). If you would like to receive future editions of this newsletter, or wish to read previous editions, please refer to:

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • France: CJEU judgment on cross-border dividend case: Groupe Steria SCA     
  • Germany: AG opinion on loss recapture and final losses: Timac Agro
  • United Kingdom: CJEU referral on the claims relating to foreign income dividends from UK resident companies

 National Developments

  • Greece: The 26% withholding tax as an additional condition for the deductibility of expenses abolished
  • Netherlands: Supreme Court rules that Luxembourg SICAV is not entitled to Dutch dividend withholding tax refund
  • United Kingdom: HMRC’s approach to Marks & Spencer claims

 EU Developments

  • EU: Adoption of the European Parliament’s common position on proposed amendments to the existing EU long-term shareholders directive

 Fiscal State Aid

  • France: European Commission orders France to recover € 1.37 billion as incompatible aid granted to EDF
  • Hungary: European Commission opens in-depth investigations into Hungary food chain inspection fee and tobacco sales tax and issues suspension injunctions
  • Italy: CJEU judgment on the calculation of interest due on the recovery of unlawful aid: A2A

Read the full newsletter here.

Should you have any questions, please contact your usual PwC contact or me.



Time to react: Recent developments regarding French cross-border dividend cases

(i) Inbound cross-border dividends

Under French tax law, dividends received by a French parent company from a qualifying subsidiary are basically tax exempt. However, 5% of the received dividends remain taxable, since this amount is deemed to represent tax-deductible expenses incurred for the management of the participation. This is not true with regard to pure domestic cases, i.e. dividend payments between French resident companies who meet the various conditions for the application of the French group tax regime. In these cases, the taxable portion of the dividends is “neutralised” for the computation of the group taxable result, which leads to a “full exemption” of dividend payments between French domiciled companies.

So far, dividend payments from a non-domestic subsidiary to a French parent company could not benefit from a full exemption since the French group tax regime is exclusively available to domestic companies. On 2 September 2015, the Court of Justice of the European Union (CJEU) ruled in the Groupe Steria case (C-386/14) that this unequal treatment between domestic and non-domestic cases is not compatible with the freedom of establishment.

Due to the CJEU’s decision it is likely that the French tax law will be amended so that French parent companies receiving dividends from their non-domestic subsidiaries could also benefit from a full exemption.

PwC observation

In the meantime, i.e. until the law has been adjusted, in cases where the conditions for the application of the French group regime would be met, it is recommended that a full exemption is claimed for dividend payments the French parent company receives from its non-domestic group companies.

(ii) Outbound cross-border dividends

Since 17 August 2012, certain dividend distributions as well as deemed dividend distributions made by companies subject to French CIT and French branches of non-European Union companies are subject to a 3% special tax. However, such tax is not applicable to dividend distributions made within a French tax group or dividend distributions made by small- or medium-sized enterprises as defined in the EU law.

Some French taxpayers have challenged this 3% special tax and claimed that it is not compliant with EU law. In response to these claims, the European Commission has introduced an infringement procedure against France and France may now respond to the objections raised by the Commission. The Commission may also request France to amend the 3% tax legislation and bring it in line with the EU law. In case France fails to comply with such a request, the Commission could refer the case to the CJEU.

PwC observation

However, in any case companies doing business in France should consider filing a “proactive” refund claim before year’s end (for companies closing their FY at 31 December) for any 3% tax they have already paid, this since contributions paid in 2013 will be statute bared.

For more information on the topic discussed above, including what it means in practice or for other tax questions, contact your local PwC engagement team or me.

Federal Supreme Court clarifies competences for issuance of tax rulings

In two recently published decisions, the Federal Supreme Court (the “Court“) has clarified the federal and cantonal competences for issuing tax rulings on income tax matters. The two Court decisions confirm that the competence for the issuance of tax rulings for direct federal tax purposes lies with the cantonal tax authorities and not with the federal tax authorities.

Although the two decisions of the Court are worded as a confirmation of its current practice, they contradict the Court´s statement made back in 2012, when it left open the question as to whether rulings issued by the cantonal tax authorities concerning direct federal taxes were binding if not explicitly approved also by the Swiss Federal Tax Administration.

Despite these two new Court decisions, it should be noted that the Federal Tax Administration is entitled, based on explicit legal provisions, to object to rulings issued by the cantonal tax authorities in cases of inaccurate application of the Federal Tax Law governing direct federal taxation by the cantons. This means that even if a cantonal tax ruling addresses direct federal tax consequences, there is still a certain risk that the Federal Tax Administration may take a different position on an objection at a later point in time.

For more information on the topic discussed above, including what it means in practice or for other tax questions, contact your local PwC engagement team or me.

EUDTG Newsletter 2015 – nr. 004 (May – June 2015)

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG). If you would like to receive future editions of this newsletter, or wish to read previous editions, please refer to:

The following topics are covered in this issue of EU Tax News:

CJEU Cases

  • France: AG Opinion on cross-border distributions of profits and non-deductible charges relating to the holding: Groupe Steria SCA
  • Germany: CJEU Judgment on the tax treatment of participations in “black funds”: Wagner-Raith
  • Germany: CJEU Judgment on exit taxation in case of transfer of assets from a German partnership to its Dutch PE: Verder LabTec
  • Netherlands:  AG Opinion on possible discriminatory treatment of foreign shareholders receiving dividends from a Dutch source: Miljoen, X and Société Générale
  • Sweden: CJEU Judgment on deductibility of FOREX losses in cross-border situations: X AB

National Developments

  • Finland: Recent developments with respect to Finnish Fokus Bank claims for non-UCITS SICAVs
  • Germany: Final Fiscal Court judgment on the DMC case
  • Italy: Provincial Tax Court rules that withholding tax levied on dividends distributed to a US pension fund is incompatible with EU law, orders refund
  • Italy: Supreme Court allows Tax Court appeals regarding the denial of access to the EU Arbitration Convention
  • United Kingdom: Court of Appeal allows compound interest claim in relation to overpaid VAT
  • United Kingdom: Clawback of UK shale aggregate waste relief

EU Developments

  • EU: European Commission presents Action Plan for fundamental reforms of business taxation in the EU
  • EU: 6-monthly ECOFIN Report to the European Council on Tax Issues
  • EU: Luxembourg EU Council Presidency tax priorities for July-December 2015
  • EU: June ECOFIN Council debates on mandatory AEOI / tax rulings and recast of Interest & Royalties Directive
  • EU: Mandate of EU Parliament’s TAXE special committee on tax rulings extended

Fiscal State aid  

  • Belgium: European Commission publishes non-confidential version of its decision to investigate the Belgian excess profit regime
  • EU: European Commission takes next step in its EU-wide State aid review of tax ruling practices

Read the full Newsletter here.

Should you have any questions, please contact your usual PwC contact or me.

Swiss Corporate Tax Reform III: how Switzerland will remain attractive

On 5 June 2015, the Swiss Federal Council published Corporate Tax Reform III for debate in parliament. The legislation is designed to boost trust in Switzerland and strengthen its position as a tax domicile. If parliament reinstates the notional interest deduction, Switzerland will be able to retain its place among the most attractive locations for doing business.

Topics of this article

  • Reform project: background and current status

  • Important reform for Switzerland

  • The reforms in detail 

Read more here.


Dating back more than thirty years, the current rules on corporate taxation – particularly the tax regimes that are due to be abolished – have been a major factor in Switzerland’s success. Plans to do away with these rules have created a great deal of legal uncertainty, raising the question of how competitive Switzerland will remain in terms of attracting international businesses.

This uncertainty came to an end when the CTR III reform package was released for parliamentary debate on 5 June 2015. Provided that parliament re-adopts the notional interest deduction, the package will contain the reform elements necessary to ensure Switzerland remains among the most attractive tax jurisdictions for corporations.

Given that Swiss public finances are in relatively good shape by international standards and that the will exists on the part of parliamentarians and the general public to adopt and implement CTR III, Switzerland will be able to preserve its reputation as a reliable, long-term, business-friendly location and an attractive tax jurisdiction for international companies. The new corporate tax legislation will help ensure the continuing success of the Swiss model in the coming decades.


Swiss Federal Council released dispatch of Corporate Tax Reform III on 5 June 2015

Last Friday, the Swiss Federal Council released the eagerly awaited dispatch and related draft bill of the Swiss Corporate Tax Reform III (“CTR III”) for further parliamentary discussion. With the CTR III, the Federal Council aims to maintain and improve the international competitiveness of the Swiss corporate tax system, although certain existing preferential rules will be abolished.

Following analysis of the answers, feedback and input from the cantons and from political and economic stakeholders, the Federal Council had already released the key parameters of the reform (read our related publication) on 1 April 2015. Compared to the parameters already announced, the dispatch contains no real surprises, but outlines in greater detail the rationale for the reduced number of individual measures and their overall composition, which the Federal Council considers a balanced package.

Click here to read the key elements of the CTR III reform, the way forward and our view of the dispatch. It also includes an overview of the positions taken by the cantons during consultation.

In addition, you will find the PwC position paper here.

Listen to our Corporate Tax Reform III Experts by following this link to the latest webcast, held on 8 June 2015.

Should you have any questions, please contact your usual PwC contact or any of the following Corporate Tax Reform III Champions at PwC Switzerland:

Andreas Staubli
Partner, Leader Tax & Legal
+41 58 792 44 72
Armin Marti
Partner, Leader Corporate Tax
+41 58 792 43 43
Daniel Gremaud
Partner, Leader Tax & Legal Romandie
+41 58 792 81 23
Claude-Alain Barke
Partner, Tax & Legal Romandie
+41 58 792 83 17
Benjamin Koch
Partner, Leader Transfer Pricing and
Value Chain Transformation
+41 58 792 43 34
Laurenz Schneider
Director, Corporate Tax
+41 58 792 59 38
Remo Küttel
Director, Tax & Legal
+41 58 792 68 69

EUDTG Newsletter 2015 – nr. 003 (March – April 2015)

This EU Tax Newsletter is prepared by members of PwC’s international EU Direct Tax Group (EUDTG). If you would like to receive future editions of this newsletter, or wish to read previous editions, please refer to:


The following topics are covered in this issue of EU Tax News:

1. EU Court of Justice (CJEU) Cases

  • Austria: AG Opinion on Austrian goodwill amortisation scheme: Finanzamt Linz
  • Germany: Judgment on German roll-over relief where acquired or manufactured assets belong to a German PE’s capital assets: Commission v. Germany
  • Germany: CJEU Referral on tax relief in the case of multiple inheritances or gifts of the same assets: Feilen
  • Germany: AG Opinion on the link between Art. 4(4) German-Swiss double tax treaty and the EU-Swiss agreement on the free movement of persons: Bukovansky
  • Italy: CJEU Order on cumulative application of administrative penalties and criminal charges: Burzio

2. National Developments

  • Belgium: New draft bill on the contribution of financial institutions to State revenue
  • Belgium: Draft Cayman Tax bill: tax transparency for ‘legal constructions’
  • Belgium: Recent developments with respect to Belgian Fokus Bank claims for funds
  • Greece: Significant procedural requirements introduced for the deductibility of corporate expenses
  • Netherlands: Dutch AG opines that Luxembourg SICAV is not entitled to a refund of Dutch dividend withholding tax

3. EU Developments

  • EU: European Commission presents “Tax Transparency Package”, including mandatory automatic exchange of cross-border tax rulings in the EU
  • EU: European Parliament adopts Resolution on Annual Tax
  • Belgium: European Commission requests Belgium to bring its rules on dividend taxation into line
  • France: European Commission launches infringement procedure over 3% contribution on distribution of profits
  • Switzerland: EU and Switzerland agree to automatic exchange of information in tax matters from September 2018

Read the full newsletter here.

Should you have any questions, please contact your usual PwC contact or me.

Federal Council sets parameters for dispatch of the Swiss Corporate Tax Reform III


Today, the Swiss Federal Council published the main parameters/measures which are to be addressed in the Swiss Corporate Tax Reform III (CTR III) proposal, which is to be submitted to the Swiss Parliament in June 2015.

Summary of the Swiss Federal Council’s communication

The parameters, published by the Swiss Federal Council today, are based on the results of the consultation on the draft CTR III bill. The draft bill was published in September 2014 and contained a variety of new measures with the objective of maintaining and fostering Switzerland’s competitiveness as a business location, while at the same time resolving the tax controversy with the EU and also taking into account international tax developments.

Based on the findings of the consultation process, the Swiss Federal Council has given instructions to make various adjustments to the draft CTR III bill published in September 2014. The parameters set out by the Swiss Federal Council can be summarised as follows:

  • Abolition of certain current tax rules including cantonal holding, administrative and mixed company status.
  • Introduction of a Swiss Patent Box at cantonal level. This measure is subject to modifications, taking into account the latest international developments at OECD level.
  • Optional introduction of an input tax super deduction for research and development costs at cantonal level.
  • Reduction of the annual cantonal capital tax.
  • Abolition of issuance stamp tax on equity capital.
  • Introduction of comprehensive rules regarding the treatment of hidden reserves and goodwill (“step-up”).
  • Harmonisation of partial taxation rules on dividend income for private individuals.
  • Reduction of cantonal income tax rates at the discretion of the individual canton.

The Swiss Federal Council decided not to further pursue the following measures, which were part of the draft CTR III bill:

  • A capital gains tax on privately held securities by individuals shall not be introduced.
  • The proposed changes to the participation exemption and the suggested changes regarding tax loss carry forward rules will no longer be pursued.
  • As the introduction of an interest-adjusted profit tax (i.e. notional interest deduction – NID) was controversially discussed during the consultation phase and a majority of the cantons were against the introduction of NID, the Swiss Federal Council has decided, for now, to exclude the NID proposition from the reform proposal.

In addition, the Swiss Federal Department of Finance (FDF) is requested to review whether a tonnage tax should be introduced. Furthermore, the Swiss Federal Council proposed an adaptation of the fiscal equalisation rules – the Federation will participate by absorbing half of all costs which may be triggered by the cantons when reducing their cantonal income tax rates.

Next steps

As a next step, the Swiss Federal Council has instructed the FDF to prepare a dispatch of the CTR III law by June 2015 for debate in the Swiss Parliament. Due to the Swiss political process, it can be expected that the new reform measures will not come into effect before 2018 or 2020.

PwC comments

The parameters set out by the Swiss Federal Council are certainly a step in the right direction towards regaining certainty for businesses in terms of their likely future tax situation in Switzerland. They will also help to maintain Switzerland’s position as an attractive business location and demonstrate that Switzerland is keen to comply with the new international taxation standards. However, for the future prosperity of Switzerland as business location, we are of the opinion that NID should once again be made part of the CTR III law. It seems that a number of cantons have not (yet) recognised the fundamental importance of this measure for Switzerland. It will therefore be important to convince political stakeholders still further (i.e. representatives of the Swiss Parliament) that the NID measure should be re-introduced.

For any questions, please contact the following Corporate Tax III Champions at PwC Switzerland:

Armin Marti
Leader Corporate Tax Switzerland
Tel: +41 58 792 43 43

Andreas Staubli
Leader Tax & Legal Services Switzerland
Tel: +41 58 792 44 72