March 7, 2019 / 11:10 AM / 8 months ago

EU probes Luxembourg tax treatment of packaging firm Huhtamaki

BRUSSELS, March 7 (Reuters) - The European Commission has opened an investigation to examine whether tax rulings granted by Luxembourg to Finnish food and drink packaging company Huhtamaki are in breach of EU state aid rules, it said on Thursday.

“Member states should not allow companies to set up arrangements that unduly reduce their taxable profits and give them an unfair advantage over their competitors,” Competition Commissioner Margrethe Vestager said in a statement.

“The Commission will carefully investigate Huhtamaki’s tax treatment in Luxembourg to assess whether it is in line with EU State aid rules,” she added.

This investigation follows Commission’s decisions to force Luxembourg to recover what it classed as illegal state aid given to Fiat, Amazon and Engie through tax rulings. Vestager has also ordered the Netherlands to recover tax from Starbucks and, in the highest profile case of this kind, Ireland to claw back 14 billion euros in taxes from U.S. tech giant Apple .

The Commission’s formal investigation into the Finnish firm concerns three tax rulings issued by Luxembourg in 2009, 2012 and 2013. The 2009 tax ruling was disclosed by so-called “Luxleaks” media revelations, the Commission said.

The three tax rulings issued by Luxembourg allowed a company of the Huhtamaki group to “unilaterally deduct from its taxable base fictitious interest payments for the interest-free loans it receives”, the EU executive said, adding that it had doubts on whether this favourable tax treatment could be justified. (Reporting by Francesco Guarascio Editing by Alastair Macdonald)

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