Engie Illegal Tax Report Published (Update)

The European Commission said September 4 it has published the non-confidential version of the final negative decision on Engie, adopted June 2018. (Updates with penultimate para giving Engie's latest reaction)

The EC concluded June 20 that Engie was granted undue tax benefits of around €120mn ($140mn) by Luxembourg. It found that Luxembourg tax rulings had allowed two Engie subsidiaries to avoid paying taxes on almost all their profits for about a decade, which is illegal under EU state aid rules as it gave Engie an advantage not available to other companies subject to the same national tax rules.

The full negative decision is available under the case number SA.44888 on the EC's competition website.

In 2008 and 2010 respectively, French utility Engie – then known as GDF Suez – implemented two complex intra-group financing structures  for Engie LNG Supply and Engie Treasury Management, both in Luxembourg. Engie said in a statement June 20 that it disputed the finding and would seek an annulment of it.  The final published report on September 4 orders Luxembourg to recover the €120mn and close its tax loopholes. Engie has again repeated that it will seek an annulment.

In a statement to NGW later September 4, it said: "As previously stated, Engie has fully complied with the applicable tax legislation and considers that it has not benefited from a State aid. The group will  enforce all its rights to challenge the State aid classification considering that the Commission did not demonstrate that a selective tax advantage was granted. Engie will therefore apply for annulment of the Commission’s decision before the competent courts. In parallel and in compliance with the Commission’s decision, Luxembourg is obliged to recover the alleged state aid, independently from legal proceedings carried out by Luxembourg and Engie against the Commission’s decision. Engie remains confident that this pending proceeding will not impact the Group’s 2018 turnover."

This comes in a week of embarrassment for the Luxembourg prime minister and treasury minister at the time the tax loopholes were agreed: European Commission president Jean-Claude Juncker.  The European Ombudsman on September 3 said that the EC failed to advertise the post of EC secretary-general and that this was one of a number of instances of "maladministration." Juncker's chief of staff, Martin Selmayr, was appointed to that post in February 2018; however his dismissal is not being called for by the Ombudsman.  

Graphic from the European Commission outlining how Engie avoided taxes, first published in June 2018.