On St Valentine’s day last Belgium won its challenge to the European Commission’s decision that its tax exemption regime for some corporate profits constituted State Aid.

In 2016, the European Commission ordered Belgium to recover €700 million in what it claimed were unpaid taxes, after concluding that selective tax advantages were granted by Belgium to a number of multinationals under the Belgian “excess profit” tax regime. Selective advantages contravene EU state aid rules. This challenge by the Commission against the Belgian tax exemption came at the same time that the Commission launched an investigation into the tax ruling practices of Member States. That investigation has resulted in formal state aid challenges against Luxembourg, the Netherlands, and Ireland in respect of the Apple case.

Last week’s ruling of the General Court of the European Union considers a number of points. The ECJ’s view is that the Belgian tax authorities are entitled to a margin of discretion over the administration of their tax system, which allowed them to influence the amount and the characteristics of the exemption as challenged by the European Commission.