Since June 2013, the Commission has been investigating the tax ruling practices of Member States. It extended this information inquiry to all Member States in December 2014. The Commission in October 2015 decided that tax rulings for Fiat in Luxembourg and Starbucks in the Netherlands granted illegal selective tax advantages to the companies in breach of EU state aid rules. The Commission also has ongoing in-depth state aid investigations into tax rulings concerning Apple in Ireland, Amazon in Luxembourg and Belgium’s “excess profit” ruling system.
According to Article 107(1) of the Treaty on the Functioning of the European Union (TFEU), state aid which affects trade between Member States and threatens to distort competition by favouring certain undertakings is in principle incompatible with the EU Single Market.
Tax rulings are generally not as such a problem under EU state aid rules. However, if a tax ruling results in a Member State providing selective advantages to specific companies or groups of companies, this distorts competition in the Single Market in breach of EU state aid rules.
Under the State aid rules contained in the EU treaties, State aid is an advantage given by a Member State to specific companies (or specific sectors of the economy), which affects competition within the EU. This advantage is not restricted to beneficial tax treatment: it can either be measures granting positive benefits (such as direct subsidies) or measures which enable a business to mitigate costs it would otherwise have incurred.
More information: Tax ruling practice
Report on tax rulings
On 25 November 2015, the European Parliament´s plenary adopted the TAXE Special Committee´s “Report on tax rulings and other measures similar in nature or effect”.
Tax rulings are recognised as a useful tool for providing legal certainty and reducing risk; recourse to legitimate tax rulings should thus not be discouraged. The MEPs deplore the compromise on exchange of tax rulings information reached in the EU Council on 6 October, which falls short of main elements of the Commission´s original proposal, such as the submission of the exchanged information to the Commission, let alone further demands by the EP: MEPs had suggested to extend the exchange to domestic rulings, with no limits to retroactivity, thus including all rulings which are still valid. Governments granting illegal state aid should be sanctioned; as MEPs point out, the obligation of recipients to pay back benefits granted illegally might even be considered a reward of member states for having taken an illegal decision.
More information: Special Committee on Tax Rulings
Switzerland is not a member state of the European Union and has no specific legislation regarding state aid. However, the absence of comparable legislation in this field of law does not mean that state aid could be granted at discretion. In particular, state aid that could distort competition in Switzerland could be caught by public law meant to provide a fair and competitive level playing field, especially with regard to state-owned companies.