Engie Subject of EU Commission Tax Evasion Investigation
The Commission of the European Union in Brussels announced on September 19 that it will be leading an investigation into the French energy company Engie for “violation of EU state-aid laws regarding illegal tax deals.” This probe comes only a few weeks after the takedown of Apple in what amounted to a €13 billion fine for bypassing EU tax laws. The Commission had been criticized for targeting American tech companies, so it is significant that they are now investigating a major European multinational. Engie is a “supranational” giant energy company, 33 percent of which is owned by the French government.
The Commission is led by Margrethe Vestager, who, since her arrival in November 2013, has led a relentless fight against tax evasion and fiscal fraud. While small- and medium-sized companies have neither the incentive nor the legal expertise to create complicated tax evasion schemes by moving money from country to country, large multinationals employ teams of highly paid lawyers charged with seeking out innovative ways to minimize taxes.
The Commission is currently investigating whether the government of Luxembourg in 2013 selectively endorsed rulings in tax benefits that would favor Engie over other European companies. Speaking to these rulings, Margarethe Vestager stated, “They seem to contradict national taxation rules and allow Engie to pay less tax than other companies.” The Commission is specifically examining a series of transactions in which the lender deducted the expenses as interest rates, while the receiver side deducted the income as dividend.
Both Engie and Luxembourg will be cooperating in the investigation; however, in the past, Luxembourg has been slow and unenthusiastic to hand over information. Both sides have stated that they have in no way offered nor accepted preferential treatment. So far, the Commission has been unable to say how much money is at stake. A recently leaked document showed that former Luxembourg Prime Minister and current EU Commission President Jean-Claude Juncker was facilitating international companies’ illegal actions, directing profits to Luxembourg and paying minimal taxes. This case has been hailed and praised by many, including French YouTuber and blogger Laetitia Bribe, as the beginning of the end of large corporations bypassing laws and receiving unjust advantages with the complicity of governments. However, the complicated nature of international tax codes has created enormous opportunities for corporate tax lawyers to exploit the system; therefore, the ultimate impact of the Commission’s investigation has yet to be seen.