2003/531/EC: Council Decision of 16 July 2003 on the granting of aid by the Belgian Government to certain coordination centres established in Belgium
Date: 2003-07-16
Institutions: Council of the European Union
Subjects: Belgium, State aid, business management, control of State aid, corporation tax, multinational enterprise, tax system

23.7.2003

EN

Official Journal of the European Union

L 184/17

COUNCIL DECISION

of 16 July 2003

on the granting of aid by the Belgian Government to certain coordination centres established in
Belgium

(2003/531/EC)

THE COUNCIL OF THE EUROPEAN UNION,

Having regard to the Treaty establishing the European Com-
munity, and in particular the third subparagraph of Article
88(2) thereof,

Having regard to the application made by the Belgian Govern-
ment on 26 May 2003,

Whereas:

(1)

(2)

(3)

(4)

In a letter dated 26 May 2003 Belgium, in accordance
with Article 88(3) of the Treaty, informed the Commis-
sion of its plan to apply until 31 December 2005 to
certain undertakings authorised to act as coordination
centres under Royal Decree No 187 of 30 December
1982 (as supplemented or amended by subsequent legis-
lation), and whose authorisations are due to expire
between 17 February 2003 and 31 December 2005, a
special type of tax treatment as described in that letter.
In a letter of the same date, registered at the General
Secretariat of the Council on 26 May 2003, Belgium
submitted to the Council a reasoned request for a deci-
sion in accordance with the third subparagraph of
Article 88(2) of the Treaty declaring that the measures
Belgium is planning to introduce are compatible with
the common market.

The coordination centres in question are responsible for
the financial and administrative coordination of multina-
tional groups.

In adopting Royal Decree No 187 of 30 December 1982
(as supplemented and amended by subsequent legisla-
tion), Belgium introduced special tax arrangements for
coordination centres to take account of the particular
nature of their activities and of the international environ-
ment in which they operate.

The Commission did not raise any objection to those
arrangements in 1987 and 1990. It looked at them again
under Article 88 of the Treaty after adoption of the
Commission notice on the application of the State aid
rules to measures relating to direct business taxation (1)
and the examination made of tax measures derogating
from the Member States' normal tax rules in the context
of the Council's proceedings on the Code of Conduct for
business taxation.

(5) Within the framework of the Council's discussions on
tax policy and of the Code of Conduct Follow-up Group,
the Council meeting on 26 and 27 November 2000
approved conclusions on the rollback of potentially

harmful arrangements whereby their effects on enter-
prises subject to harmful arrangements on 31 December
2000 would cease on 31 December 2005 at the latest,
regardless of whether the arrangements were granted for
a predetermined period. The Council also reserved the
right to grant a possible extension beyond 31 December
2005 for some arrangements to take account of special
circumstances.

By Decision of 17 February 2003 (2) the Commission
declared the Belgian arrangements
for coordination
centres to be incompatible with the common market.
Under that Decision, Belgium is obliged to abolish the
aid arrangements in question or amend them to make
them compatible with the common market, although
the effects of
the arrangements may continue until
expiry of each current individual authorisation or until
31 December 2010, whichever is the earlier.

The undertakings referred to in Belgium's application
hold temporary but
renewable authorisations under
Royal Decree No 187. Their authorisations expire before
1 January 2006.

The multinational groups of which the coordination
centres covered by the planned aid arrangements form
part have made considerable investments
in those
centres. Without the new aid which Belgium plans to
grant
they might be obliged to cease operating in
Belgium.

Cessation of the activities of the coordination centres
covered by the new aid would have negative economic
and social repercussions for Belgium.

The new aid planned is temporary.
It is intended to
avoid irreversible loss of financial business and jobs in
Belgium and in the Community by enabling the benefici-
aries to continue operating in Belgium, at least for the
period necessary to enable Belgium to introduce other
measures for coordination centres established on its
territory or to facilitate reorganisation of the investments
of the multinational groups in question, avoiding abrupt
termination of contracts.

By contrast, the absence of any special tax arrangements
for the coordination centres in question in the period
until 31 December 2005 might cause a collapse of large
multinationals' confidence in the Belgian State and have
significant economic repercussions for Belgium in the
long term as well.

(6)

(7)

(8)

(9)

(10)

(11)

(1) OJ C 384, 10.12.1998, p. 3.

(2) Not yet published in the Official Journal.

L 184/18

EN

Official Journal of the European Union

23.7.2003

(12)

(13)

Since the Commission Decision of 17 February 2003
allows the effects of the arrangements for the coordina-
tion centres to be maintained until deadlines which fall
after 31 December 2005, depending on the expiry date
of
the current authorisation, and other Commission
Decisions grant deadlines until 31 December 2010 for
competitive special tax arrangements in other Member
States, application of the special measures planned by
Belgium should not cause any distortions of competition
which are out of proportion to the anticipated benefits.
Moreover, it is compatible with the balanced dismantling
of comparable special arrangements in the Member
States and their dependent or associated territories
sought by the Council in its proceedings on the Code of
Conduct for business taxation.

Exceptional circumstances
therefore exist making it
possible to consider as compatible with the common
market the new aid planned by Belgium for coordination
centres authorised as at 31 December 2000 and whose
authorisations expire before 1 January 2006, which
consists in granting them the tax treatment described in
its letter of 26 May 2003 until 31 December 2005.

(14) Given the urgency of the matter, it is imperative to grant
an exception to the six-week period mentioned in para-
graph I(3) of the Protocol on the role of national Parlia-
ments in the European Union, annexed to the Treaty on
European Union and to the Treaties establishing the
European Communities,

HAS ADOPTED THIS DECISION:

between 17 February 2003 and 31 December 2005, shall be
considered compatible with the common market; by way of
derogation from the general rules on taxation, it involves:

— application of the normal corporate tax rate to a theoretical
tax base corresponding to a variable percentage of certain
operating costs (the ‘cost plus’ method). However, an alter-
native tax base is used if it exceeds the tax base resulting
from application of the ‘cost plus’ method; this alternative
tax base includes the abnormal or benevolent advantages
received by the centres and non-deductible expenses,

— application of a special annual tax of EUR 10 000 per

employee, with a ceiling of EUR 100 000,

— exemption from the précompte immobilier (property tax)
on buildings owned by the centres which they use for their
professional activity,

— exemption from précompte mobilier (withholding tax) on
dividends, interest and royalties paid by the centres except,
in the case of interest, where the beneficiary is subject to
tax on natural persons or to tax on legal persons,

— exemption from précompte mobilier (withholding tax) on
revenue which the centres receive from money deposits,

— exemption from the 0,50 % registration tax on subscrip-

tions of capital and on increases in authorised capital.

Article 2

This Decision is addressed to the Kingdom of Belgium.

Article 1

Done at Brussels, 16 July 2003.

The aid which Belgium plans to grant in the period up to 31
December 2005 to undertakings authorised as at 31 December
2000 to act as coordination centres under Royal Decree No
187 of 30 December 1982, and whose authorisations expire

For the Council

The President

G. MAGRI