The European Commission is continuing its efforts concerning “tax rulings” or comfort letters issued by tax authorities to an individual company on a specific tax matter. Tax rulings from tax authorities may provide a specific company clarity on how its corporate tax will be calculated or on the use of special tax provisions. However, tax rulings may involve state aid within the meaning of EU rules if they are used to provide selective advantages to a specific company or group of companies. Prior investigations, for example, have centered on tax rulings related to transfer pricing arrangements of multinational entities operating in an EU Member State.
Today, the EC announced that two injunctions have been issued to Estonia and Poland, with instructions for these countries to deliver information on their tax rulings practice within one month to the EC.Previous information requests to Estonia and Poland were sent as part of the EC’s focus on national tax ruling practices as applied to all EU Member States.
The EC stated that Estonia and Poland failed to respond adequately to the request for information, and have only submitted general information but refused to provide a specific and detailed overview of tax rulings issued from 2010 to 2013.
The EC today is also asking 15 EU Member States to provide a substantial number of specific (individual) tax rulings.
Today, letters requesting individual tax rulings are being sent to Austria, Belgium, the Czech Republic, Denmark, Finland, France, Germany, Hungary, Italy, Lithuania, Portugal, Romania, Slovakia, Spain, and Sweden.Previously, the EC has already requested individual tax rulings from Cyprus, Ireland, Luxembourg, Malta, the Netherlands, and the UK.
On the basis of information received, the EC did not ask Bulgaria, Croatia, Greece, Latvia, and Slovenia for tax rulings.
Since June 2013, the EC has been investigating the tax ruling practices of EU Member States. In five ongoing in-depth investigations, the EC has raised concerns that tax rulings may give rise to state aid issues. In-depth investigations focus on tax rulings related to transfer pricing arrangements provided multinational entities by Ireland, the Netherlands and Luxembourg and whether such tax rulings give a selective advantage to a company that its competitors do not have.
In February 2015, the EC opened an investigation in to a Belgian tax ruling scheme and whether the rulings allow companies to reduce their corporate tax liability on the basis of excess profit tax rulings.
The EC is also working toward greater transparency on tax rulings, as part of its agenda against tax avoidance and harmful tax competition.
In March 2015, the EC proposed to require EU Member States to automatically exchange information with each other on their tax rulings.
Contact a tax professional with KPMG's Global Transfer Pricing Services.