State aid: Commission opens in-depth investigation into tax exemptions given to certain Belgian companies

Τhe European Commission has opened an in-depth investigation to determine whether Belgium’s implementation of a system of support for innovative companies is in line with EU rules on state aid. The Commission will examine in particular the terms on which a certain number of Belgian companies have benefited from tax relief. The opening of an in‑depth investigation gives third parties an opportunity to comment on the measure under assessment. It does not prejudge the outcome of the investigation.

In 2006 the Commission approved a support scheme for research and development (R&D) that exempted certain innovative companies (‘Young Innovative Companies’) from paying payroll tax on part of the remuneration paid to their scientific personnel. Belgium had pledged to incorporate into its national legislation the definitions of the types of research eligible for tax breaks under European rules on state aid for research, development and innovation (R&D&I) (see IP/06/1600 and MEMO/06/441).

During a screening exercise started in 2011 the Commission found that Belgium had not introduced these definitions until 2013, seven years after the scheme began. Providing tax breaks to innovative companies without these definitions does not allow aid to be targeted on the R&D objective that justifies its granting and guarantees that distortion of competition can be limited. The aid granted would therefore appear to have conferred an undue advantage on the beneficiary companies, which is contrary to the state aid rules on R&D&I. At this point in the investigation, Belgium has not provided sufficient information to dispel the Commission’s doubts.

Moreover, the Belgian authorities failed to notify the Commission when they tacitly renewed the scheme after its expiry in July 2011 and increased the level of tax relief.

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