EU: CJEU Advocate General opinion on compatibility of Belgian excess profit ruling scheme with EU State aid rules
AG proposed that the CJEU dismiss the appeals and confirm that the Belgian excess profit ruling practice constitutes unlawful State aid
The CJEU published the opinion of its Advocate General (AG) on a series of appeals concerning the Belgian “excess profit” tax ruling practice and its compatibility with EU State aid rules.
Background
Belgian tax law had allowed a Belgian company within a multinational group to make unilateral downward adjustments for “excess profits” after obtaining a ruling. In January 2016, the European Commission (EC) concluded that the ruling system was a State aid scheme and ordered recovery. After a series of court judgments and appeals, the case was brought before the CJEU again after the General Court ruled in September 2023 that the rulings constituted unlawful State aid.
AG opinion
- In the AG’s opinion, the General Court correctly upheld the reference framework identified by the EC. The AG found that the derogation from that framework was not in the law itself (Article 185(2)(b) of the Belgian Income Tax Code), but in its "manifestly unlawful application" by the Belgian authorities. The AG noted that the provision was intended to apply the arm's length principle to specific cross-border transactions, but the authorities applied it to grant general downward profit adjustments to a hypothetical benchmark without requiring an identifiable transaction. This interpretation was contrary to the law's wording and purpose.
- The AG also rejected the argument that multinational companies were not in a comparable situation to stand-alone entities, concluding that the scheme conferred a selective advantage.
- Regarding the recovery of the aid, the AG found that beneficiaries could not rely on the principle of legitimate expectations because the rulings were based on an interpretation that was manifestly inconsistent with the law.
The AG proposed that the CJEU dismiss the appeals and confirm that the Belgian excess profit ruling practice constitutes unlawful State aid under EU law.
Read a May 2026 report prepared by KPMG’s EU Tax Centre