AB-InBev and 34 multinationals received sweetheart tax deals

Ireland, Luxembourg, Switzerland – Europe’s list of tax havens is long. And it’s getting longer. On 11 January 2015 the European Commission ruled that about 35 multinational companies, including brewer AB-InBev, have received tax sweeteners from Belgium so generous as to amount to illegal state aid.

It has ordered Belgium to revise its tax settlements with the companies concerned, charging them combined additional taxes of EUR 700 million (USD 760 million).

According to media reports, the European Commission objected to Belgium’s so-called “excess profit” tax regime. It assumes “that multinationals should be entitled to tax breaks because they have economies of scale. In practice it allows some international groups to reduce their Belgian tax burden by up to 90 percent,” The Guardian newspaper says.

While no companies were explicitly named in the Commission ruling, reports in Belgium and the UK have quoted sources which name AB-InBev as one of the beneficiaries of the illegal scheme.

Belgium’s De Tijd newspaper reported in 2014 that a tax agreement allowed AB-InBev to transfer EUR 140 million of profit from around the world over three years to a Belgian company that exists only on paper.

An AB-InBev spokesperson has been quoted in The Times newspaper, saying that they are “disappointed” by the ruling. “We will consider our options, taking into account the reactions by the Belgian authorities.”

The Belgian finance minister, Johan Van Overtveldt, was quoted as saying that the ruling was expected and that the “excess profit” system, which was introduced in 2005, had been on hold since February 2015, when the commission had first announced its investigation. He said in a statement that the country would seek talks with the EU and could consider an appeal like those filed by the Netherlands and Luxembourg in related cases.

Last October, the European Commission ruled against the Netherlands and Luxembourg over tax deals they had struck with the coffee company Starbucks and car maker Fiat respectively.

It ordered the governments to reclaim between EUR 20 million and EUR 30 million from each company. Both decisions are expected to be appealed at the EU’s courts in Luxembourg, a process that can take years, reports The Wall Street Journal. The governments involved in the investigation have denied giving special treatment, and the companies have denied receiving it. Both countries are appealing against the decision.