The General Court considers the Belgian Excess Profits Ruling to be unlawful State Aid


On 20 September 2023, the General Court of the European Union (GCEU) ruled for the second time in the case of the Belgian Excess Profits Ruling (Belgian EPR) (Judgement of the General Court, 20 September 2023, in case T-131/16 RENV). Contrary to its first decision in 2019 on EPR as a “scheme”, it now confirmed the decision of the European Commission (EC) of 11 January 2016 that the EPR constituted an unlawful tax scheme and infringed the EU State aid rules.

Facts of the case

By an advance ruling, Belgian entities part of a multinational group were able to reduce their tax base in Belgium to reflect that part of the residual profit generated through synergies, economies of scale and similar benefits of being a vertically integrated multinational group should not be attributable to the Belgium entities.

On 11 January 2016, the EC concluded that the Belgian EPR constituted unlawful aid, giving its beneficiaries a selective advantage, for the purposes of Article 107(1) TFEU, that was incompatible with the internal market. The decision obliged the Belgian government to recover the alleged unlawful aid provided to several economic operators. On 14 February 2019, the GCEU annulled the final decision of the EC, finding that the latter had erred in qualifying the measure as an ‘aid scheme’. On 16 September 2021, the European Court of Justice (ECJ) annulled the judgment of the GCEU and, by doing so, upheld the final decision of the EC regarding the qualification of the Belgian excess profit rulings as an aid scheme. The ECJ then referred the case back to the GCEU.

CGEU judgment

In the ruling of 20 September 2023, the CGEU now rules that the EC was right to find in its decision of 11 January 2016 that the Belgian EPR infringes the European rules on State aid. The GCEU rejects the arguments that Belgium has put forward, including the failure to take into account the tax rules applicable in Belgium.

The GCEU concluded that the EC:

  • demonstrated that the EPR granted tax advantages to its beneficiaries;
  • correctly concluded on the selectiveness of the EPR as the members of a multinational group benefitting from it were treated differently from entities subject to the standard Belgian Corporate Income Tax regime;
  • was right in finding that the EPR were not open to companies that did not make investments, centralize activities or create employment in Belgium, or were not available to members of a small group.


This decision illustrates the complexity of state aid rules in transfer pricing matters, particularly when assessing domestic fiscal policy incentives stemming from an era way before the OECD/G20 project on Base Erosion and Profit Shifting. The launch of the proposal for Directive on the codification of the arm’s length principle on September 12, 2023, demonstrates the need for clarity. Particularly relevant is the contemplated introduction of mandatory corresponding adjustments in the case of primary downward adjustments in one country. It seems to be largely inspired by the EPR case at hand. The CGEU decision is open for appeal before the ECJ.  It should however be limited to points of law. It is premature to meaningfully comment about the contemplated course of action of the Belgian Government or  the multinational groups concerned.. In absence of any appeal, this judgment  becomes the final step in the proceedings and the tax due by each impacted operator should be recalculated as if the State aid has not been granted. Finally, this decision is rendered at a time where the EU Commission actively seeks for “matching” responses in the context of fiscal incentives granted outside the EU economic block to accommodate a.o. accelerated investment in the green agenda and digitalization and reliable supply chains overall (focusing on energy and critical raw materials). Reference can be made to Executive Vice-President Dombrovskis press release of September 16, stressing the priorities to:

  • maintain the EU’s traditional openness, while shoring up our economic resilience;
  • seek to to maintain the EU’s standing in the world marketplace and stay competitive.