Commission Decision of 17 February 2003 on the aid scheme implemented by Belgium for coordination centres established in Belgium (notified under document number C(2003) 564) (Only the French and Dutch texts are authentic) (Text with EEA relevance) (2003/757/EC)

• Published date: 18 February 2003
• Subject Matter: aides accordées par les États,concurrence,ayudas concedidas por los Estados,competencia,aiuti degli Stati,concorrenza
• Official Gazette Publication: Journal officiel de l’Union européenne, L 282, 30 octobre 2003,Diario Oficial de la Unión Europea, L 282, 30 de octubre de 2003,Gazzetta ufficiale dell’Unione europea, L 282, 30 ottobre 2003

2003D0757 — EN — 18.02.2003 — 000.001

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This document is meant purely as a documentation tool and the institutions do not assume any liability for its contents

►B COMMISSION DECISION of 17 February 2003 on the aid scheme implemented by Belgium for coordination centres established in Belgium (notified under document number C(2003) 564) (Only the French and Dutch texts are authentic) (Text with EEA relevance) ( ►C1 2003/757/EC ◄ ) (OJ L 282, 30.10.2003, p.25)

Amended by:

		Official Journal
		No	page	date
►M1	COMMISSION DECISION of 13 November 2007	L 90	7	2.4.2008

Corrected by:

►C1 Corrigendum, OJ L 285, 1.11.2003, p. 52 (757/03)

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▼B

COMMISSION DECISION

of 17 February 2003

on the aid scheme implemented by Belgium for coordination centres established in Belgium

(notified under document number C(2003) 564)

(Only the French and Dutch texts are authentic)

(Text with EEA relevance)

( ►C1 2003/757/EC ◄ )

THE COMMISSION OF THE EUROPEAN COMMUNITIES,

Having regard to the Treaty establishing the European Community, and in particular the first subparagraph of Article 88(2) thereof,

Having regard to the Agreement on the European Economic Area, and in particular Article 62(1)(a) thereof,

Having called on the interested parties to give their views pursuant to the abovementioned provisions ( 1 ), and having regard to their comments,

Whereas:PROCEDURE

(1) In 1997 the Council (Ecofin) approved a code of conduct for business taxation ( 2 ) to tackle harmful tax competition and set up an ad hoc group to examine the tax measures to which the code of conduct applies. Following the undertaking in the code of conduct, the Commission issued a Notice in 1998 on the application of the state aid rules to measures relating to direct business taxation ( 3 ), in which it affirmed its commitment to the strict application of the rules according to the principle of equality of treatment. Against this background, the Commission, acting in accordance with the state aid rules, began its examination of the measures identified by the code of conduct group as harmful. The Commission would stress here the parallels between the work of the code of conduct group and the Community's policy on state aid, both of which are aimed at eliminating those measures that distort or threaten to distort competition in the common market. The Commission also notes the progress that has already been made towards this goal of eliminating harmful tax competition, and in particular the steps taken by the Member States to abolish the measures identified by the code of conduct group as harmful, or at least to remove the harmful aspects of such measures.

(2) For further details of the procedural steps that preceded the Commission's decision of 27 February 2002 to initiate the formal investigation procedure, the Commission would refer to the letter it sent to Belgium on this occasion (letter initiating the procedure) ( 4 ).

(3) To recapitulate: Royal Decree No 187 of 30 December 1982 provides for a tax scheme for approved coordination centres that derogates from ordinary tax law. On 2 May 1984 the Commission decided that it did not object to Royal Decree No 187 in the form it would take after amendment by the bill submitted to it by the Belgian Government on 3 April 1984. The Belgian Government was notified of this decision. However, the amendments actually introduced by the Belgian Government did not correspond to the bill submitted to the Commission. The Commission consequently initiated a formal investigation procedure on 12 December 1985. Following amendments proposed by the Belgian Government and enacted on 4 August 1986, the Commission informed Belgium on 9 March 1987 that it had closed the procedure in the light of the amendments made by Belgium in order to make the aid scheme compatible with Article 92 of the EC Treaty (now Article 87).

(4) On 1 December 1997 the Council adopted a Code of conduct for business taxation and asked the Commission to examine or re-examine the tax measures in force in the Member States. On 11 November 1998 the Commission issued a Notice on the application of the State aid rules to measures relating to direct business taxation (the Notice).

(5) Having sent a request for information to the Belgian authorities on 12 February 1999, the Commission announced on 17 July 2000 that the scheme probably now had to be considered as state aid. It then initiated the cooperation procedure applicable to existing aid schemes under Article 17(2) of Council Regulation (EC) No 659/1999 of 22 March 1999 laying down detailed rules for the application of Article 93 of the EC Treaty ( 5 ), by calling on the Belgian authorities to submit their comments. The Belgian authorities criticised the procedure and demanded that the cooperation stage be launched by the Members of the Commission, acting as a body, rather than by the Commission departments. The Commission contested this approach.

(6) On 11 July 2001 the Commission wrote to Belgium ( 6 ) proposing appropriate measures to make the scheme compatible with the rules on State aid. The Belgian authorities sent their comments in a letter of 19 September 2001, informing the Commission that these comments were not to be construed either as an acceptance or as a rejection of the proposed measures.

(7) In the absence of an explicit acceptance of the measures within the specified time limit, and in the light of the comments made by the Belgian authorities in their letter of 19 September, the Commission decided on 27 February 2002 to initiate the procedure referred to in Article 88(2) of the EC Treaty, in accordance with Article 19(2) of Regulation (EC) No 659/1999. The Commission informed Belgium of this decision by letter of 1 March 2002 ( 7 ).

(8) The original one-month deadline having been extended ( 8 ), the Belgian authorities notified the Commission of their position by letter of 12 April 2002, stating that these were not comments within the meaning of Article 88(2) of the EC Treaty but arguments within the meaning of Article 19(2) of Regulation (EC) No 659/1999 relating to the measures proposed by the Commission.

(9) By letter of 16 May 2002 Belgium communicated the text of a preliminary draft bill amending Royal Decree No 187. The amendments made to the Royal Decree by this text are the subject of a separate procedure ( 9 ).

(10) After meetings with the Belgian authorities on 26 June and 3 July 2002, the Commission asked Belgium for further information about both the scheme currently in force and the draft new scheme that had been notified ( 10 ). After an extension of the original deadline the Belgian authorities replied by letter of 30 August 2002.

(11) The Commission's decision to initiate the procedure was published in the Official Journal of the European Communities ( 11 ). The Commission asked the interested parties to make known their views on the measure in question. The Commission received comments on the subject from 90 interested parties, which it then forwarded to Belgium by letters of 24 September and 8 November 2002 ( 12 ). Belgium responded by letters of 16 October and 16 December 2002.

DESCRIPTION OF THE MEASURES INVESTIGATED

(12) The tax scheme for coordination centres is based on Royal Decree No 187 of 30 December 1982. The Royal Decree was supplemented by the Law of 11 April 1983, the Royal Decree of 20 December 1984 and the Law of 28 December 1992, and has also been repeatedly amended ( 13 ). The scheme has applied in its present form since 1 January 1993. A general explanation by the tax administration is contained in Circular CI.RH.421/439.244 of 29 November 1993.

(13) A coordination centre qualifies for the scheme if it has been individually approved by Royal Decree. In order to qualify for approval a coordination centre must, under Royal Decree No 187, be part of a group with a multinational character ( 14 ) and have capital and reserves of at least BEF 1 billion and an annual consolidated turnover of at least BEF 10 billion. Only certain types of preparatory, ancillary or centralisation work are allowed ( 15 ), and firms in the financial sector (credit, banking, insurance) do not qualify. Finally, coordination centres must employ at least the equivalent of 10 full-time staff in Belgium by the end of their first two years in business.

(14) The approval of the coordination centre is valid for 10 taxable periods from the taxable period in which the application for approval is made. Since the adoption of the Law of 23 October 1991 the approval may be renewed under the same conditions as those that applied to the original approval.

(15) Royal Decree No 187 derogates from the ordinary tax system by providing for the taxable income of approved coordination centres to be assessed at a flat rate that corresponds to a percentage of expenditure and operating costs (the ‘cost plus’ method). The calculation is based on all the centre's costs excluding staff costs, financial charges and corporation tax. The profit margin must in principle be calculated case by case, taking into account the work actually carried out by the centre. If the centre itself charges for some of its services at a rate that corresponds to the costs plus a percentage for profits, the same percentage can be used for the profit margin, provided this is not abnormal. In the absence of any objective criteria for determining the percentage of profits to be taken into account the rate is set at 8 %.

(16) The coordination centre's taxable profits may not, however, be less than the total of the expenditure or charges that are not deductible as

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