Engie faces EC investigation over unfair tax advantage

The European Commission yesterday announced it opened an in-depth investigation into Luxembourg's tax treatment of the GDF Suez group, now Engie (EPA:ENGI), on concerns of gaining unfair advantage over other companies.

Luxembourg tax authorities appear to have treated the same financial transaction between companies of GDF Suez in an inconsistent way, both as debt and as equity which resulted in tax benefits in favour of GDF Suez.

In-depth investigation into Luxembourg's #tax treatment of GDF Suez group opened: https://t.co/oCjeAzWpq0 pic.twitter.com/UN04c1i6iN

— European Commission (@EU_Commission) September 19, 2016

"Financial transactions can be taxed differently depending on the type of transaction, equity or debt - but a single company cannot have the best of two worlds for one and the same transaction. Therefore, we will look carefully at tax rulings issued by Luxembourg to GDF Suez. They seem to contradict national taxation rules and allow GDF Suez to pay less tax than other companies," said Margrethe Vestager, commissioner in charge of competition policy.

If the Commission's concerns are confirmed, this would amount to illegal state aid.

Following a similar investigation, last year the Commission decided that Luxembourg and the Netherlands have granted selective tax advantages to Fiat Finance and Trade and Starbucks. Each of the companies had to recover between EUR 20 and 30 million (USD 22.4 - 33.6m) in unpaid taxes.

(EUR 1 = USD 1.12)

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