March 7, 2019 / 11:12 AM / 3 months ago

EU investigates Luxembourg's tax treatment of packaging firm Huhtamaki

BRUSSELS (Reuters) - The European Commission has opened an investigation to examine whether tax rulings by Luxembourg amounted to state aid for Finnish food and drink packaging company Huhtamaki, it said on Thursday.

The Commission’s formal investigation concerns three tax rulings in 2009, 2012 and 2013, the earliest of which was disclosed in the 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.

Member states should not allow companies to set up arrangements that unduly reduce their taxable profits and give them an unfair advantage over 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 said.

The Luxembourg government said it did not offer illegal state aid to Huhtamaki and will respond to the European Commission.

The investigation follows the 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 had to claw back 14 billion euros (12 billion pounds) in taxes from U.S. tech giant Apple.

Reporting by Francesco Guarascio in Brussels; additional reporting by Michel Sinner in Luxembourg; Editing by Alastair Macdonald and Elaine Hardcastle

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