The European Commission has announced a final decision in its state aid investigations into transfer pricing rulings granted by Luxembourg to a multinational entity (MNE) group. In its decision, the EC found that the rulings may underestimate the taxable profits of the MNE group by deviating from the arm’s length principle and, therefore, constituted illegal state aid.
In its final decision (4 October 2017), the EC estimated the value of the competitive advantage granted to the MNE group at up to €250 million, plus interest. It is up to the Luxembourg tax authorities to determine the exact amount and to recover what the EC considers to be illegal aid.
It remains to be seen what the view of the Court of Justice of the European Union will be on the EC’s transfer pricing approach within the framework of the state aid rules.
Read an October 2017 report prepared by the KPMG member firm in the Netherlands
Read an October 2017 report [PDF 206 KB] prepared by KPMG’s EU Tax Centre
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